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Bioalpha Holdings Bhd the company was positive on domestic market growth this year as many Malaysians were now aware of the health benefits from local herbal products.

DESARU, Johor: Domestic and foreign demand for Bioalpha Holdings Bhd's herbal supplement products is expected to improve this year, with a pick up in export markets and external third-parties sales.

Bioalpha said with increasing awareness among Malaysians and prevalence of lifestyle diseases, traditional medicines had become popular, and it was on the right footing to capitalise the market with its range of products.

The company also expects upstream planting activities in its two herbal parks here and Pasir Raja in Terengganu to show better harvest yield and output quality, leading to substantial increase in earnings for its financial years 2020 and beyond.

Managing director William Hon said Bioalpha was positive on domestic market growth this year as many Malaysians were now aware of the health benefits from local herbal products.

"We are positive on our agricultural division's prospects and we continue to make good progress at our herbal parks.

"As an integrated nutraceutical player involved in farming activities, the supply of herbal-based raw materials is crucial to ensure quality and safety of active compounds that go into our health supplement products," Hon told reporters during a vist to the Desaru plant last week.

Bioalpha’s herbal park here spans 300 acres, with over 100 acres having been developed and fully-planted with various types of crops.

Planting activities are underway for the remaining 200 acres.

The company’s Pasir Raja Herbal Park has a total size area of 1,003 acres with 260 acres already fully-planted, while the balance 744 acres are being developed.

Numerous species of corps are planted at the herbal parks including Malaysian indigenous herbs such as Tongkat Ali, Misai Kucing, Kacip Fatimah, Hempedu Bumi, Roselle and Dukung Anak.

"As of now, we have over 20 types of plants and are still adding more crops as we move forward. Our aim is to be fully self-sufficient for herbal-based raw materials that are of good quality.

"Our target is to have a combined 2,000 tonnes of harvest by end-2020 from our herbal parks in Desaru and Pasir Raja. As our harvest volume increases, we also sell our herbs to external third parties, hence adding another income stream,” said Hon.

He holds a 16.5 per cent stake in the company with Malaysian Technology Development Corporation (MTDC) and Perbadanan Nasional Bhd holding 16.1 per cent and 10.8 per cent stake respectively.

Both herbal parks are accredited with the Malaysian Good Agriculture Practices (MyGAP) certification issued by the Ministry of Agriculture and Agro-based Industry Malaysia (MOA).

Bioalpha serves three key markets - Malaysia, Indonesia and China - and uses 80 per cent of its manufacturing turnover for research and development activities.

Prior listing on Bursa Malaysia’s ACE Market in 2015, the company held three per cent domestic market share before rising to five per cent in 2018.

Bioalpha is in the process of transferring its listing status to the Main Market.

Its China revenue for the nine months of 2019 (9M19) doubled year-on-year (yoy) to RM10.4 million as the company secured a maiden order from China’s Jinrui Yandetang Co Ltd (JYC), which is involved in traditional Chinese medicine (TCM).

In October 2019, Bioalpha had launched seven new functional food products with JYC and was expected to launch more health supplement products this year with JYC, CGS-CIMB Securities Sdn Bhd said in a recent report.

Overall, Bioalpha's 9M19 domestic revenue declined 60 per cent yoy to RM6.1 million as domestic consumer demand remained weak.

"This was disappointing as we had earlier expected domestic revenue to pick up, with the third quarter (3Q) being traditionally a strong quarter. Nevertheless, the company has indicated there are signs of domestic demand picking up in the fourth quarter (4Q) of 2019," the research firm noted.

CGS-CIMB Securities also viewed that Bioalpha’s Desaru herbal park should record a marginal profit in the financial year (FY) 2020 and was expected to produce 500-600 tonnes of herbs.

The company’s Pasir Raja (Terengganu) 1,000-acre herbal park should break even this year, producing around 1,000 tonnes herbs.

On average, the processed herbs can generate RM2-RM5 per kilogram in revenue, CGS-CIMB Securities noted.

"In summary, we are positive on the potential that our agriculture division holds, with the expected increase in planted acreage and harvest volume. We believe our efforts shall bear bountiful fruits in the not-too-distant future," Hon said.

He said Bioalpha had plans to open six new Constant Pharmacy chain outlets this year, adding to the 20 already in the Klang Valley.

The company is also working with retailers such as Village Grocer to carry its herbal products.

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