TA Research expects Amway to focus on improving its ABO-centric programmes.
PETALING JAYA: TA Research remains cautious on the prospects of Amway (M) Holdings Bhd
, citing growing concern surrounding the diminishing Amway Business Owner (ABO) payouts.
The research house said, in a recent report, the shrinking ABO payouts signalled a weakened sales force and a noticeable deceleration in the momentum of sales growth.
“Furthermore, we are also inclined to believe that the multi-level marketing space has become saturated and is clouded by rising competition from other platforms, which provide similar product offerings at a more affordable price point,” TA Research said.
Nonetheless, TA Research expects Amway to focus on improving its ABO-centric programmes, including a higher advertising and promotion mix to stimulate demand and inject new momentum to the sales force amid ongoing digitalisation.
For the third quarter of financial year ending Dec 31, 2023 (3Q23), Amway reported a net profit of RM46.21mil, up from the RM18.75mil in the previous corresponding quarter. This is despite a fall in revenue to RM333.47mil from RM371.79mil in 3Q22.
The quarterly drop in revenue was due to lower turnover in health-supplement products in the post-pandemic phase and intensifying competition.
In the nine months ended Sept 30, 2023 (9M23), the company’s net profit increased to RM83.52mil against RM53.90mil in the previous corresponding period while revenue fell to RM1.05bil compared with RM1.12bil previously. The dip in 9M23 revenue was due to weaker demand for health and wellness products as well as home appliances.
The research firm reiterated its “hold” call on Amway, with a lower target price of RM5.80 a share. “Amway remains an attractive dividend play, offering a lucrative dividend yield of 8.1% to 9.5% from FY23 to FY25,” TA Research said.
