What does this headline "Thai rice farmers besiege Yingluck's office" got to do with ZHULIAN? Zhulian share price has fallen drastically, and Kenanga Reseaarch today downgraded Zhulian to "Underperfrom" with Target Price slashed from RM4.70 to RM2.83.

SO WHAT"S GOING ON? The prolong political crisis in Thailand has impacted Zhulian's earnings because Thailand contributes about 60% of the Group's earnings. Zhulian's largest MLM network is in Thailand, comprising 85% of its 700,000++ distributors. 

The main issue in Thailand is the controversial rice subsidy scheme which is falling apart as the Thai government is facing problems raising funds to subsidize farmers. The controversial rice subsidy scheme, which pay farmers up to 50% above market rates for their produce, is falling apart. As a result, disposal income in the rural areas has been significantly affected, which negatively impacted Zhulian’s operations in Thailand. This explains the sharp decline in demand in the final quarter of 2013. 

As Thailand election has also been postponed to Apr-2014, this would further pile more downside pressure to demand which could last for at least two quarters.

But, keep an eye on Zhulian for buying opportunity.