KUALA LUMPUR: Integrated health supplements manufacturer Bioalpha Holdings Bhd, en route to a listing on the ACE Market of Bursa Malaysia, aims to sell its products in the Middle East in 2016 — beginning with the United Arab Emirates (UAE), said its managing director and chief executive officer William Hon Tian Kok.

“The expansion is a step forward for us to broaden our revenue and customer base, given that our products are halal-certified,” Hon told reporters after the launch of its initial public offering (IPO) prospectus here yesterday.

Bioalpha initially wanted to enter the Middle East market in the second quarter of 2015, but the plan was delayed pending the relevant approval and permits from authorities.

To recap, Bioalpha had on Oct 28 last year signed a memorandum of understanding (MoU) with UAE-based Fathima Group of Companies LLC (FGC) for the latter to distribute Bioalpha products to supermarkets, pharmacies and healthcare centres. FGC has 25 retail outlets in the UAE and other member countries within the Gulf Cooperation Council. 

Hon said Bioalpha currently has an outstanding purchase order of RM10.26 million, which will be fulfilled by end-2015. Currently, sales in Malaysia contributed 47.41% to its total revenue, followed by Indonesia (40.63%), Australia (11.19%) and others (0.77%).

Hon said Bioalpha will open 10 outlets in retail malls in the Klang Valley via licensing arrangements, at a cost of about RM750,000 per outlet.

“Our expansion plan with MyAngkasa (MyAngkasa Holdings Sdn Bhd) is to establish retail outlet chains that will enhance our distribution channel as well as increase our market share of 3.63% currently,” he said, adding that discussions on licensing arrangements are still ongoing.

Earlier, Hon said Bioalpha’s proposed listing on the ACE on April 14 at an offer price of 20 sen per share is pegged at a price-earnings multiple of 11.56 times, based on its net earnings per share of 1.73 sen registered in the financial year ended December  2013 (FY13).

The group expects to raise RM20 million via the issuance of 100 million new shares, of which 80 million will be placed to selected investors and the remaining 20 million will be offered to the public. This will give it an enlarged share capital of 463.41 million, which means its market capitalisation, upon listing, will hit RM92.7 million.

Bioalpha said 45.4% of its IPO proceeds will be used for working capital, followed by 30% or RM6 million for both capital expenditure (15%) and research and development (15%); 13.1% to repay its bank borrowings, with the remaining 11.5% for listing expenses.

For the nine months ended Sept  ember of FY14 (9MFY14), Bioalpha’s profit leaped 42% to RM3.83 million or 2.51 sen per share from RM2.7 million or 1.81 sen per share a year ago, while revenue in 9MFY14 rose 59% to RM18.76 million from RM11.79 million previously on higher sales from its original design manufacturer and house brands.

Hon said Bioalpha intends to pay 30% from its future net profits as dividends.

This article first appeared in The Edge Financial Daily, on March 27, 2015.