Termination of MOUs by KANGER INTERNATIONAL BERHAD, what does this mean for shareholders?

On May 17 and 18, KANGER had 4 critical announcements that investors must take note.

1. “The Board of Directors of KANGER wishes to announce that following the approval of Ministry of Health’s Drug Control Authority Malaysia of another company as the registered holder for Sinopharm COVID-19 vaccine in Malaysia, KANGER and Sinopharm Group Hunan Changde Medical Co. Ltd. has on 17 May 2022 terminated the Collaboration Agreement.”
    
2. “The Board of Directors of KANGER wishes to announce that following the approval of Ministry of Health’s Drug Control Authority Malaysia of another company as the registered holder for Sinopharm COVID-19 vaccine in Malaysia, KANGER has on 18 May 2022 terminated the MOU with the Government.”
    
3. “The Board of Directors of KANGER wishes to announce that following the approval of Ministry of Health’s Drug Control Authority Malaysia of another company as the registered holder for Sinopharm COVID-19 vaccine in Malaysia, KANGER has on 18 May 2022 terminated the MOU with K-Star.”
    
4. “The Board of Directors of KANGER wishes to announce that following the approval of Ministry of Health’s Drug Control Authority Malaysia of another company as the registered holder for Sinopharm COVID-19 vaccine in Malaysia, KANGER and ZP has on 18 May 2022 terminated the MOU.”

In plain, simple English, this would mean that KANGER had dropped their plans to distribute Sinopharm COVID-19 vaccine in Malaysia.

Before we decide whether this is good or bad, let us first take a look at our country’s vaccination data.

There are 2 key information that we should note under the information provided by MOH. The first one being majority of the population had been vaccinated, and only a very small portion of the vaccination are done via Sinopharm.

From what we know, China is facing big problems in their vaccination plans as the 3 top vaccines being used are CoronaVac, Pfizer and Sinopharm.

The effectiveness of China’s lockdown plan could be traced back to what kind of vaccine they are using. There are no other words to put this, but Sinopharm might not be the most effective vaccine compared to others as it has only 70% plus success rate, and CoronaVac is the worst with only 30% plus success rate.

Therefore, the drop of Sinopharm vaccine distribution might not be negative for KANGER as i) Most of our population had been vaccinated and minimal marketability for the vaccines and ii) Sinopharm may not be as effective as other vaccines.

All in all, this allow KANGER to realign their focus in their bamboo, construction, and property investment business. The share price of KANGER had also responded positively to the drop of the MOUs despite a weak market.