KUALA LUMPUR: Tapping into the Chinese market is next on the agenda for animal health solution provider, Rhone Ma Holdings Bhd, which hopes to export its products there soon.

“While there are still a lot to be done in Southeast Asia, we are also targeting China next for export,” Rhone Ma group managing director, Dr Lim Ban Keong, told The Edge Financial Daily recently.

The group currently exports animal health products to countries around the region, including Thailand, Indonesia, Brunei, Taiwan, the Philippines, Vietnam and Singapore.

Exports contributed about 3.11% of total group revenue as at financial year ended Dec 31, 2017 (FY17), with the remaining 96.89% primarily generated from Malaysia.

Lim said he hopes to continue increasing revenue contribution from exports, which had increased from 2.12% as at end of FY16, mainly due to higher demand from existing markets in Thailand, Indonesia as well as the recently new market in Taiwan.

“It’s not that easy to enter China right now. They are implementing stringent registration of products. So we have to deal carefully,” said Lim.

Lim added that the general challenge of exporting animal health products is primarily with ensuring they are registered with the local authorities.

“One challenge is registration, because it takes time. For now we can only export products that have been registered or products not required to be registered. The other challenge is capacity. We need to produce more,” he said.

Nonetheless, he is confident that the group will benefit from a potential trade war between China and the US. “We can see a positive effect from that,” he said, referring to the supply gap that may emerge as US exporters face challenges in China.

Rhone Ma is an end-to-end animal health solution provider, integrating the provision of animal health services with the manufacturing and distribution of animal health products that focus mainly on the livestock industry.

According to its annual report for the financial year ended Dec 31, 2017 (FY17), animal health services accounted for approximately 1.87% of group revenue, whereas 24.25% was contributed the distribution and supply of food ingredients.

The largest contributor to revenue is its animal health products which accounted for approximately 73.88%. Under animal health products, the group provides over 80 types of vaccines, 250 types of pharmaceuticals and over 50 types of feed additives, which are either in-house manufactured or sourced from international manufacturers.

For the full FY17, the group’s net profit rose 52% year-on-year (y-o-y) to RM13.92 million from RM9.17 million, as revenue grew 15% y-o-y to RM137.49 million from RM119.2 million. The group’s fourth quarter ended Dec 31 showed a net profit of RM3.58 million versus a net loss of RM1.84 million from the previous year, on higher top line from its animal health products, which helped push revenue up 16% to RM36.2 million from RM31.28 million.

On the distribution side, the group has signed a few distribution agreements over the past few months.

Via its wholly-owned subsidiary Rhone Ma Malaysia Sdn Bhd (RMM), the group inked a distribution agreement with Zoetis Malaysia Sdn Bhd (ZMSB), a subsidiary company of US-based Zoetis Inc, to distribute ZMSB’s animal health products that are related to poultry in Malaysia. The three-year deal took effect from April 1.

“Why Zoetis? Because they are world No 1 [in the segment]. We are the market leader in Malaysia; we believe that working together with Zoetis will help them gain further access to the market in Malaysia,” said Lim.

Besides that, Rhone Ma has inked two other distributorship deals related to animal health products this year with Taiwan-based Excelsior Bio-System Inc, as well as Europe-based Ceva Sante Animale S A and Ceva Animal Health Malaysia Sdn Bhd.

For the year ahead, Lim is confident that the group will sustain profitability as it focuses on product and market expansion.

Meanwhile, he said the group’s current warehouse under construction in Kapar, Selangor is 90% ready, and is expected to be completed the third quarter of this year. The group has also just witnessed the groundbreaking of a good manufacturing practice-compliant plant in Nilai, Negeri Sembilan, which is expected to boost production capacity for the group going forward.

Last Friday, Rhone Ma’s shares closed unchanged at 86 sen, giving it a market capitalisation of RM142.76 million. In the past one year, however, the stock has fallen about 38%.