PETALING JAYA: Rhone Ma Holdings Bhd
’s recent accreditation for its feed additive is viewed positively, as this could help to broaden its overseas revenue stream, which currently accounts for less than 5% of total revenue.
The company was awarded the Feed Additive and Pre-mixtures Quality System certification by the World Certification Services (M) Sdn Bhd, recognising its exceptional quality and safety in feed additive production.
This certification will support the company’s efforts to explore international markets.
“In the short to midterm, Rhone Ma is targeting the export of feed additives within the Asean region.
“Over the longer term, it aims to broaden its market reach to other Asian countries, including China, Korea and Taiwan,” Affin Hwang Investment Research (Affin Hwang Research) said in its note yesterday.
In addition, the research house expects the company’s animal health segment to continue driving earnings.
It noted that the company posted a strong recovery in the animal health segment over the past nine months, with revenue and pre-tax profit up by 19% and 97% year-on-year, respectively, driven by higher demand for pets and livestock products.
However, Affin Hwang Research remained cautious about its food ingredient segment.
“The food ingredient segment has been a drag on overall earnings, posting losses over the same period of time due to previously acquired high-priced inventory.
“With commodity prices remaining volatile, we remain cautious about this segment. Overall, we are expecting Rhone Ma’s earnings to grow by 2.4%, 2.1% and 5% in 2024-2026,” it said.
The research house maintained a “hold” call on the counter with an unchanged target price of 70 sen, based on an unchanged 11 times 2025 price earnings ratio.
“Overall, we like Rhone Ma’s proactive management team, extensive product portfolio and expanding manufacturing capacity, but we would need to see stronger earnings growth to rerate the stock, which we do not see yet,” the research house said.
It pointed out that the upside for the company would be stronger-than-expected earnings and faster and profitable expansion of the dairy business.
However, Rhone Ma’s risks included weaker earnings, stiff competition in the animal health business, operational challenges in the dairy business and startup/construction risks of the milk processing plant.
For its third quarter ended Sept 30, 2024 (3Q24), Rhone Ma’s net profit rose to RM3.2mil from RM3.02mil in the previous corresponding period, while revenue declined to RM51.5mil from RM54.61mil a year earlier.
In a Bursa Malaysia filing on its 3Q24 earnings, the company said its risk management policies and procedures will assist the group in identifying, monitoring and responding to key risks.
This, Rhone Ma said, would allow it to capture opportunities when it arises.
“In the face of adversities, we trust our strategies will navigate the way forward as our prospects remain positive,” the company said.
