Company Background

Rhone Ma Holdings Berhad (RMH) is principally involved in the provision of end-to-end animal health solution. This entails the integration of the provision of animal health services and the manufacturing and distribution of animal health products mainly to the livestock industry. Additionally, RMH is also involved in the distribution and supply of food ingredients.

IPO Statistic

The IPO, expected to raise gross proceeds of RM31.6mn, entails the public issue of 42.1mn new ordinary shares at an issue price of RM0.75/share.

Investment Thesis

1. Steady Growth Industry 2. End-to-End Animal Health Solution Provider 3. Healthy Cash Flow and Strong Balance Sheet

Key Risks

1. Failure to Obtain Licence and Registration 2. Product Contamination 3. Foreign Currency Fluctuation Risk 4. Outbreak of Disease

Valuation

We value RMH at RM1.05sen/share based on SOTP valuation, ascribing a PER multiple of 12.0x for the animal health products and services segment and 8.0x for the food ingredients segment. Against CY17, this implies a PER of 11.6x. All in, we commend the group’s position in a steady growth industry, ability to offer extensive animal health products and services, healthy cash flow and strong balance sheet.

Source: TA Research - 5 Dec 2016