I think Rhone Ma's main business will always be in animal health. Their forte is in animal husbandary. They treat milk production as a by-product of their R&D and currently sells their milk off-farm. Kulim will later conveniently take their milk off them. With the government's encouragement, practically every state is setting up large cattle farms and when they encounter problems, which they will, who will they look for ? Rhone Ma of course!
2021 - Rhone Ma planned to increase its cattle herd to 350 head by the end of 2021, raising its monthly milk production from 30,000 L/ month to approximately 65,000 L. - GMP (Good Manufacturing Practices at Nilai Utama Enterprise Park) commenced operations in April 2021 is running at more than 35 per cent capacity.
2022 - By end-2022, the Group?s target is to produce 120,000 L of milk per month.
2023 - New GMP in Nilai target to achieve 100% by 2023 - estimated to increase annual production capacity by 4x (2,500 tonnes, existing plant in PJ produce only 637 tonnes per annum)
2025 - Rhone Ma hopes to build the plant with a capacity of 14.4 million litres per year in Kapar, Selangor by the third quarter of 2025.
Note - Rhone Ma Holdings Bhd via its subsidiary A2 Fresh Sdn Bhd, has entered into a joint venture agreement with Kulim (Malaysia) Bhd to develop, operate and manage a potential dairy project. The initial investment required for the project will be up to RM41.4m, which will be funded through equity in the form of subscription of shares by the shareholders in proportion to their shareholding ratio in the special purpose vehicle company. - In this JV, Kulim owns 65% shares, while A2 Fresh S/B holds 35% shares. Since A2 Fresh S/B is 49% owned, Rhonema will have just 17.15% share in this dairy project. - A1 protein is even linked to diabetes, heart disease, sudden infant death syndrome and autism etc. However, those links are not confirmed. A2 milk is marketed as a healthier choice without such troublesome issues. It's reported that Rhonema is the first producer offering fresh A2 milk in Peninsular Malaysia. - Kulim is a well-known plantation giant which was taken private and delisted from main board in 2016. It's a subsidiary of Johor Corporation. Johor Corp owns famous brands such as KPJ, KFC, Pizza Hut, Ayamas, Life etc.
Rhone Ma Holdings Bhd (Fundamental BUY with TP RM1.07) • Rhone Ma Holdings Bhd (Rhone Ma) is an end-to-end animal health solution provider. The company ventured into fresh milk production in 2019. • Despite the slow business environment during the Covid-19 pandemic, Rhone Ma’s revenue has recorded a 12% CAGR over the past 2 years. In tandem with the expanding market revenue in Animal Health and Nutrition Industry, the company’s market share has grown from 4.7% in 2018 to 5.8% in 2021. • Rhone Ma’s GMP compliant plant in Nilai which has a production capacity of 2,500 MT/year has commenced operation in April 2021. The plant is currently 35% utilised and is expected to increase gradually. Management guided the plant to reach full utilisation rate by end 2023 as the PJ GMP compliant plant has been running at full capacity (637 MT/year). • Its Human Healthcare segment revenue grew 231% in 2021, attributed to the Covid-19 outbreak. The company’s CiTest Covid-19 Antigen Rapid Test Kit is widely used by clinics and hospitals. Moving forward, Rhone Ma will continue its R&D effort to expand its human healthcare products range such as other purpose test kit. • We see Rhone Ma’s venturing into Ruminant industry as synergistic to its animal health product segment. Meanwhile, the government aims to increase the country’s fresh milk self-sufficiency level to 100% within five years; and this will create an opportunity to its 49% owned A2 Fresh SB. The company is planning to expand its dairy farm from 300 cattle to 500 cattle by end 2022, producing its own brand milk targeted to launch in 1Q2023. • According to Protégé Associates, the Animal Health and Nutrition Industry has grown to a RM2.33bn revenue industry vs RM2.09bn in 2018. We see Rhone Ma is well positioned in the growing livestock market in Malaysia. BUY with a target price of RM1.07 based on 18x PER FY22F (3-year average). • Financially, the company’s leverage is manageable with net gearing of less than 10%.
Good company but not good operator , boss don’t want to play his counter.. so obvious blocking the share price from moving up… to those who are not in yet, go find better operators with more commitment , those already in, just forget about it, rhonema won’t move anytime soon… cheers..
There is no such thing as operator Only buy-side institutions, foreign institution, insiders, substantial shareholders, market-makers, wealthy clients (sophisticated), and retail investors. Quit obsessing on the concept of "operator"
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