Updated: Tuesday September 24, 2013 MYT 7:36:23 AM
Boost for direct selling firms, Zhulian and Amway trading near or at all-time high
PETALING JAYA: Direct selling companies could be in a renewed uptrend phase with further interest to their stocks coming from recent corporate developments and changing consumer lifesyle factors.
Some of these companies’ shares such as Zhulian Corp Bhd and Amway (M) Holdings Bhd are trading near or at their all-time highs as top and bottom line earnings continued to grow.
Other smaller companies by market capitalisation such as Hai-O Enterpreise Bhd and little known CNI Holdings Bhd may ride on increased investor optimism.
Kenanga Research, which issued a note yesterday on Zhulian after it attended a corporate roadshow by the company, noted that it was impressed and optimistic with its long-term prospects and outlook.
It noted that Zhulian could be expanding into Myanmar at the end of this year or early 2014 by appointing a master agent there and that it has now around 150,000 distributors promoting its products at the Thai border.
The research house had rated the stock an outperform with a target price of RM4.05.
Its stock price and warrants gained 21 sen to RM3.86, and 12.5 sen to 45 sen respectively yesterday.
Shares of Amway closed unchanged yesterday at RM12.10 which is near its all-time high of RM12.40 recorded in August. Its share price too has risen in tandem with its steadily increasing top and bottom line.
Meanwhile, Hai-O’s shares remain subdued of late as it had recently reported first-quarter earnings that have come below analysts’ expectations.
Despite a downgrade, with a target price of RM3.15, Affin Investment Bank analyst Mandy Teh was, however, positive on the stock.
“We remain positive on Hai-O due to the company’s healthy fundamentals, high dividend yields and valuations at 11 times earnings financial year 2014,” Teh wrote in the report.
Analysts said that direct selling companies would benefit from the rising economic tide should their products, which usually caters to a niche market, find a firm footing locally.
Publish date: 24/09/13