This week, I made my debut in stock investing after virtually following the stock market for about 1 year. I bought in BIOHLDG and it became my FIRST ever investment in Malaysia stock market.

I believe many may argue that now is not the best time to get into the stock market, especially making a decision to acquire a counter that did not drastically drop during the recent selldown. However, I decided to buy in considerable amount of BIOHLDG at RM0.24 and I will continue to add if attractive price appeared again in the market.

WHY? 

Let me explain the rationale behind my decision to choose BIOHLDG among 900+ listed companies in Malaysia.  

Background

To start, Bioalpha Holdings Berhad ("BIOHLDG") is an integrated herb-based health supplement company principally involved in agricultural, research and developments, manufacturing, sale of HALAL certified food and health supplement products (ODM and under the Company’s proprietary house brands) as well as operation of Constant pharmacy. In short, BIOHLDG involves in the whole value chain of herb-based supplement business.

Upside

1) The ONLY One in Malaysia

BIOHLDG is the only company in Malaysia that involved in the whole value chain of herb-based supplement business. From raw materials to R&D to manufacturing to distribution to pharmacy, this business model has made BIOHLDG to achieve the highest net profit margin among its peers.

Net profit margin (as of FY2017)

Apex Healthcare (Manufacturing + Distribution + Pharmacy) : 7.2%

CCM Duopharma (Manufacturing): 9.1%

Caring (Pharmacy): 3.6%

BIOHLDG: 14.8%

2) HALAL market penetration

According to its 2017 Annual report, nearly half of its revenue contributed by Malaysia, the rest equally shared by China and Indonesia. While all of BIOHLDG’s products are HALAL certified, it is clear that BIOHLDG is currently working hard to penetrate the high muslim population markets such as Indonesia and West China.

3) Expand through partnership

In Indonesia, BIOHLDG partnered with local company to manufacture its brand products for local consumers. This approach has helped to expedite the medical approval process. In China, a new subsidiary BIOHLDG HK will facilitate R&D activities via collaboration with local HK universities, in order to strengthen its presence its China. (Note that BIOHLDG has already established partnership with other university in Malaysia and Taiwan)

Despite the fact that BIOHLDG demonstrated poor performance in these two countries this recent quarter due to longer than expected medicine approval, we can expect strong revenue once they received approval for its new medicine products.