The Board of Directors of RMH (“Board”) wishes to announce that Rhone Ma Malaysia Sdn Bhd (“RMM”), a subsidiary of RMH, had on 12 December 2017, received a signed amendment dated 8 December 2017 to the distribution agreement dated 7 November 2000 between RMM and Merial (as amended on 31 July 2001, 31 January 2003, 6 June 2003 and 23 July 2014) to replace the current products list with a new products list which excludes swine, poultry, ruminant and veterinary public health products (“Excluded Products”) (“Amendment”).
Currently, RMM is the distributor of Merial products comprising products for swine, poultry, ruminant and companion animals as well as veterinary public health products. Pursuant to the Amendment, RMM will continue to distribute companion animal products of Merial. In respect of the Excluded Products, Merial or its affiliate or any nominated designated third party shall be entitled in its sole discretion to repurchase the remaining inventory of the Excluded Products in the possession of RMM which meets the criteria specified in the Amendment.
In the event where Merial decided not to repurchase the Excluded Products, Merial shall inform RMM in writing and RMM shall use its best efforts:
(i) to sell all remaining inventory of the excluded swine, veterinary public health and ruminant products for the period up to 31 December 2017; and
(ii) to sell all remaining inventory of the excluded poultry products for the period up to 30 March 2018.
Notwithstanding the above, in the event that RMM, despite its best efforts, is not able to sell the remaining inventory as stated in (i) and (ii) above, Merial or its affiliate or any nominated designated third party shall have the sole discretion to purchase the remaining unsold inventory of the Excluded Products in the possession of RMM which meets the criteria specified in the Amendment at the price in accordance with the product list annexed to the Amendment.
In addition, RMM shall, as required and/or when requested by Merial, continue importation and sell the Excluded Products as annexed to the Amendment, up to when the marketing authorisation and/or all regulatory assignments and product registrations for the Excluded Products are successfully transferred to Merial and/or to its nominated third party.
The Amendment is not expected to have any material impact on the earnings of the Group for the financial year ending 31 December 2017 but is expected to have a negative financial impact to the Group for the financial year ending 31 December 2018 as the sale of the Excluded Products supplied by Merial collectively contributed approximately 31.54% and 47.77% of the total revenue and profit before taxation (excluding the one-off charge of listing expenses which amounted to approximately RM4.14 million) of the Group for the financial year ended 31 December 2016, respectively.
Notwithstanding the above, the Board is of the view that the negative financial impact would be mitigated by the following:
(i) the Company will explore options with other major international suppliers of animal health products for the distribution of their products for poultry, swine and ruminants;
(ii) the sales and marketing team will increase their efforts to market and sell other products particularly the in-house manufactured products; and
(iii) the Company will enhance its sales and marketing efforts to expand its market share in regional markets which have growth potential.
The Company also anticipates that upon the completion and operation of its new warehouse and GMP-compliant plant, the Company will be able to increase the volume of production and sales of its own animal health products.
so, it seems they are just a distributor? That means the principal can terminate anytime? The question is, will there be more termination from other principal?
I still cant understand why this company can rise so much. Since the France company had been terminated their distributorship, and now Rhonema change their supplier called CEVA. How come the investors compare a super big company (Merial ranked top 5 in animal health) with CEVA. I think they may still face huge profit drop in the future.
Chean Yeh : why not rise liao? cash in hand $35mil while borrowing $4mil only.. new plant will complete 4th qtr 2018, which will increase production capacity by 4times!..yes its 4 times!... while new warehouse will complete on 3rd qtr 2018 , its taking 1 full year 2018 to see their full power.
kyosan, yes it is 4 times! However, the new factory only manufacture their own product. it may only can offset the losing of distributorship. I also decide to buy this company before but after Merial terminate the distributorship, it show many uncertainty.
RHONEMA - New milk company in town riding on huge demand
- On July 1, 2020, Rhone Ma completed the acquisition of a 49% stake in in One Lazuli Sdn Bhd (OLSB), Nor Lazuli Nutrition Sdn Bhd (NLN) and Nor Livestock Farm Sdn Bhd respectively.
- Going forward, the new businesses would deliver 25% or more of the net profits of the group.
- OLSB is principally involved in the wholesale and distribution of pharmaceutical and veterinary products including animal feed. Its products largely cater to the ruminant segment.
- NLN is principally involved in the manufacturing, wholesale and distribution of livestock feed and other related products. Its animal feed products are mainly for the consumption by ruminants.
- NLF is principally involved in the business of livestock. With the acquisition of NLF, Rhonema is able to gain immediate entry into the dairy segment. NLF’s dairy farm currently produces A2 cow’s milk.
- The coming fourth quarter earnings should reflect some of the contribution from the milk business.
- Meanwhile, FY21 will likely see the full inclusion of the new businesses.
- If we were to follow the profit guarantee figures (and those were based before it acquired its second batch of cows), there should be an addition of RM1mil to its bottom line at the very minimum.
- Meanwhile, Rhone Ma’s group managing director Dr Lim Ban Keong has been consistently buying Rhone Ma shares throughout this year.
- His last date of buying was up to Dec 10, 2020, where he has now accumulated a stake of 46.65%.
- On Nov 25, Rhone Ma told Bursa that it was proposing the issuance of up to 80.34mil free warrants. The warrants are on the basis of two warrants for every five existing Rhone Ma shares held by entitled shareholders on the entitled date.
- These warrants will be for free. This is a bonus issue, and not a rights issue.
- In Rhone Ma’s circular to shareholders on Dec 31, 2020, for illustrative purposes only, the exercise price is assumed at 70 sen per warrant.
One of the things I like about Rhonema is the milk business. Milk is so expensive in Malaysia/Singapore, not many ppl can afford it. So good to be able to support this business....make milk more affordable and at the same time I also gain mah!
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
ahlengs
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