Stock Watch -- Zhulian

Zhulian is one of the leading Direct Selling Companies in Malaysia with more than 80 authorized agencies and approximately 100,000 distributors. Founded in 1989 with initial core business in distributing gold-plated jewellery through Multi-Level Marketing (MLM) channel, Zhulian had since diversified its products lines to home care, f&b, nutritional supplements, personal care, cosmetics, air treatment, water treatment, sleep enhancement products and disposable hygiene products.

Keeps on Growing

After venturing into Thailand and Indonesia market since 1990’s, Zhulian is currently looking to spread its wings to Philippines and Vietnam. In fact, Indonesia market is expected to contribute to its earnings tremendously in the next few years because of huge untapped market. Currently, it’s Thailand and Indonesia operations contribute 46% and 5% of its total sales respectively.

New products

The company would continue to introduce 8-10 new products every year to entice its consumers and help its MLM agents to push sales. Moreover, the future direction is to have more consumables revenue which is recession proof.

Dividends

With a payout of 60%, one could expect get an attractive net dividend yield of 6-7% per year now. And, the company has Rm127mil cash currently.

Undervalue Gem?

Many research houses has a BUYcall on Zhulian, and the target price are ranging between Rm2.30 to Rm2.50, which implies a potential upside of around 20%. With such a stable and low risk counter, couple with decent dividend yield and strong growing market, would you make it your Gem?