The research house also lowered its target price (TP) to 99 sen, down from RM1.03 previously.

It predicted a resurgence in multi-level marketing (MLM) sales might not occur until FY2025, it said in a note last Friday.

This expectation is rooted in the projected impact of rising wages and government stimulus measures on the industry’s recovery.

“We estimate that Beshom’s retail and wholesale segments will see largely flat earnings growth ahead, in line with historical trends,” it said.

Unstable financial position

The traditional healthcare group reported a significant decrease in net profit, which plummeted 53% to RM2.66 million in the fourth quarter ended April 30, 2023, from RM5.67 million in the corresponding period last year.

This was due to reduced revenue stemming from diminished consumer confidence, decreased consumer spending, and increased marketing expenses.

In a filing with Bursa Malaysia, the company said these factors had negatively affected its MLM operations.

Meanwhile, revenue dropped 13.97% to RM38.94 million from RM45.27 million, and EPS fell to 0.89 sen from 1.9 sen.

The board had recommended a final dividend of two sen per share from five sen previously.

The ongoing uncertainty in both domestic and international economic conditions, along with rising inflation and diminished consumer buying power, continued to negatively impact MLM distributors, its filing said.

These factors have negatively impacted consumer confidence and their inclination to invest in premium health supplement products.

The principal business of Beshom involves wholesale and retail, multi-level marketing, pharmaceutical manufacturing and Chinese medicinal clinics. Beshom Holdings is the new investment holding company of the Hai-O group of companies.

At 2.37pm, Beshom’s share price rose one sen or 0.99% to RM1.02, valuing the company at RM306.11 million.