In a note today, TA Securities pointed out that Amway’s core net profit for the first half of 2023 (H1 FY2023), which grew 20.2% year-on-year (y-o-y) to RM43.3 million, came within its full-year forecast at 55%.

Meanwhile, Amway’s net profit for the second quarter ended June 30, 2023 (Q2 FY2023) increased by 18% to RM17.7 million from RM14.9 million a year ago.

Revenue, however, fell 3% y-o-y to RM343.7 million, down from RM354.6 million the previous year.

The research firm stated that Amway might encounter challenges moving forward due to reduced consumer confidence, resulting from uncertainties in the global economy.

Additionally, there could be a decrease in demand for health supplements following the end of the Covid-19’s pandemic phase.

TA Securities has trimmed Amway’s net profit forecasts by 9.5% for FY2023, by 8.1% for FY2024, and by 5.4% for FY2025, to reflect weakening growth in the multi-level marketing (MLM) space.

“Despite the company’s continuous digitisation efforts and marketing mix to spur higher sales volume, we are inclined to believe that the earnings outlook for the MLM industry would be slowing due to normalising spending patterns within the health supplement category,” it explained.

At market close today, Amway’s share price dropped by 3 sen or 0.56% to RM5.35, giving the group a market capitalisation of RM879.46 million.