While those who have heard of INS Bioscience Bhd know it more as a direct-selling company, its accounts show that OEM sales to third parties are far more profitable for the group, reported The Star yesterday.
Its listing prospectus showed that INS Enterprise, a direct selling company produced earnings of only RM480,000 on a net profit margin of 2.7% in 2004.
The Origin Foods Sdn Bhd, a wholly-owned original equipment manufacturing (OEM) subsidiary, earned RM4.9mil and had an exceptionally high net margin of 63% in the same year.
The reason for the contrasting profit margins between the two subsidiaries is that direct-selling can generate high levels of sales but costs, in the form of commissions and incentives to agents, are also high.
INS chief executive officer Datuk David Yeat defines INS as a research and development company, which produces herbal products, with nutrients extracted from plants and given a pleasant taste. In such efforts, INS has teamed up with a number of local and foreign universities. INS is not mainly a direct-selling company, he emphasised.
Compare with other listed direct selling company like Amway, Cosway, CNI , DXN etc. The result of INS direct selling division really mediocre.
The company is seeking OEM business aggressively. Rumours said that one renowned beauty and cosmetic company in Malaysia also approach by INS to become it OEM customer.
INS share price of 30.5 sen yesterday is, however, still below its initial public offering price of 35 sen.
This is mainly due to its listing in July last year, not long after several stocks fell limit-down, which weakened market sentiment. Following that, a substantial investor sold down his INS shares. A legal battle with it ex-employee and ex-actress Lim Chew Yin doesn't help either.
Technorati Tag: Biotechnology pharmaceutical Malaysia Health & wellnessMultilevel Marketing Direct Selling Stock Market
