• An integrated herbal supplements manufacturer. BIOHLDG (listed in April 2015) is an integrated herbal supplements producer. About 60% of group revenue is from house brands (30% ODM and 10% others) and its best sellers include cordyceps sinensis, tongkat ali and collagen beauty products. As at 9MFY2015, its geographical revenue breakdown was Indonesia (48%), China (27%), Malaysia (22%) and others (3%).
• With support from the Federal, Terengganu and Johor state governments, the company was allocated 1,300 acres in Peninsula Malaysia to plant organic herbs. The company currently has two farms and is already harvesting from both. Herbs like turmeric, ginger, misai kuching, kacip fatimah, hempedu bumi, roselle, tongkat ali, pecah beling and dukung anak have been successfully planted. The company plans to use most of the herbs for its own in-house production, while the balance will be sold to external parties.
• Expanding its pharmacy chain. BIOHLDG is in a 70:30 JV with MyAngkasa, the National Co-operative Organisation of Malaysia, to establish a chain of retail outlets nationwide as this would provide the group with the outlets and network to sell more of its house brands. MyAngkasa currently has around 12,000 cooperatives and 8m members nationwide.
• In uptrend channel. After plunging from 52-week high of RM0.48 (22 Apr) to a low of RM0.225 (25 Aug), BIOHLDG’s share prices had es tablis hed a s olid upward channel prices holding firmly above the 100-d SMA (near RM0.30), supported by positive oscillators. A decisive breach above RM0.355 (28 Jan high) is likely to spur prices higher towards the RM0.38 (upper channel and 61.8% FR) and our long term objective of RM0.42 (76.4% FR) levels. Key supports are RM0.32 (daily mid Bollinger band) and RM0.315 (uptrend line support and 50-d SMA). Cut loss at RM0.30.
• Attractive risk to reward ratio with 25.3% upside against 10.4% downside. All in, we see an attractive risk to reward ratio for investor with a theoretical entry price of RM0.335 given that the downside to the cut loss zone of RM0.30 is 3.5sen (-10.4%) while the upside to the LT price objective of RM0.42 is 8.5sen (+25.3%).

Source: Hong Leong Investment Bank Research - 2 Feb 2016