With the recent public battle between hedge fund manager Bill Ackman of Pershing Square Capital and Herbalife Ltd (NYSE: HLF), investors are not particularly keen on investing in multi-level marketing companies. After all, the fact remains that it is extremely complex to determine if a particular Multi Level Marketing company is running a Ponzi scheme. The only real test for the company might only be TIME.
One such company in Malaysia stands out. One of the largest and longest MLM Company in the world, Amway remains a privately held company. However, in Malaysia, due to the fact that it has to meet the local regulatory requirement, it is listed its Malaysia business in the Malaysian Bursa. Today, Amway Malaysia Holdings Bhd (AMW: MK)
Even today, Amway Malaysia continues to clock in impressive growth rate in these saturated market. Its revenue has been growing consistently at a CAGR of 5.9% since 2009. Its earnings per share has growth at a stellar 10.7% a year since 2009. The company is not only distributing nutritional products such as its brand of Nutrilite, it has a complete range of product that can easily rival large supermarket chains such as Aeon Co. (M) Bhd. (KLSE:AEON).
The company also has one of the strongest balance sheet in the industry. Operating with no debt, the company is at a net cash position of more than RM150 million. Because of its company structure, Amway Malaysia Holdings constantly payout a large part of its earnings as dividends to shareholders.
Value In Action
Although too many MLM companies presents great growth potential together with huge regulatory risk, Amway Malaysia has demonstrated its ability to be a stable income provider for many of its shareholders. However, this stable company does not come cheap, at a Price To Earnings Ratio of 17.6 times and with a dividend yield of only 3.36%, the company isn’t exactly screaming cheap for investors concerned about price.
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All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and does not in any way represent those of his employer and other related entities. Stanley Lim does not own any shares in the companies mentioned above.