Period  4Q13/FY13

Actual vs. Expectations The reported FY13 net profit of RM109.1m is largely within our estimate and market consensus of RM106.9m (102%) and RM104.8m (104%), respectively.

Dividends  Spot on to our dividend forecast. A single tier dividend of 10 sen per share and a single tier special dividend of 22.5 sen per share have been declared for the quarter, bringing the full-year total dividend to 62.5 sen per share.

 This implies a net dividend yield of 5.2%

Key Result Highlights YoY, FY13 revenue improved 4.6% on the back of growth in products sales, which were driven by the successful execution of its sales and marketing programmes and the price hike implemented during the year (1 Feb & 1 April 2013). FY13 net profit continued to grow, at 9.3%, owing to strong sales and a lower effective tax rate, which led to a 0.6ppt net margin expansion from 12.5% in FY12 to 13.1% in FY13.

 QoQ, 4Q13 turnover was lower by 16.9% as a result of higher distributor productivity achieved in the preceding quarter, supported by the sales and marketing programmes in the last quarter. Strong revenue growth was registered in the last quarter, due to exceptional demand for its Atmosphere air purifier (a new product introduced in that quarter). In tandem with the lower sales performance, 4Q13 net profit declined to RM29.0m (-12.8% QoQ).

Outlook  We continue to remain neutral on AMWAY on the back of high product cost outlook due to the strengthening of USD, despite the management’s continuous effort to grow its sales by enhancing the accessibility of products and brands, new product introductions and continuous sales & marketing programmes.

Change to Forecasts We are maintaining our net profit estimates of RM111.3m for FY14E and introducing our net profit estimate of RM121.0m for FY15E. The growth would be mainly supported by expected higher distributor productivity riding on the company’s successful sales and marketing programs.

Rating Maintain MARKET PERFORM

Valuation  We are maintaining our TP of RM12.65 based on an unchanged 18.7x forward PER (which is at +1.5x SD level above its mean) on the FY14E EPS of 67.7 sen.

Risks  The implementation of GST could potentially hamper consumer spending.

 Strengthening USD may cause higher cost of stocks.

Source: Kenanga