This article first appeared in The Edge Financial Daily on January 29, 2018
KUALA LUMPUR: ACE Market-listed PeterLabs Holdings Bhd, which recently announced the appointment of its new executive director Lau Kin Wai, is exploring plans to broaden its existing livestock-feed business by introducing new technologies. To be executed in the next 12 months, the plan will be an avenue of growth for the company.
PeterLabs will leverage on its substantial shareholder’s specialties to do that — Fatfish Ventures Sdn Bhd, which emerged with a 7.7% stake last April.
Fatfish Ventures is the local vehicle of Internet venture accelerator Fatfish Internet Group Ltd (FFG), which was listed on the Australian stock exchange in July 2014. It has invested in 17 companies and engaged with more than 380 million consumers. FFG has a market capitalisation of A$35 million (RM110 million).
Fatfish Ventures bought into PeterLabs to accelerate the latter’s growth by incorporating a new business area using its technological know-how, via the former’s unique co-entrepreneurship and venture building model, said Lau, who is also the chief executive officer of Fatfish Ventures and FFG.
“Fatfish Ventures is a technology venture group and it invested in PeterLabs to enhance our value through its network and resources. Fatfish Ventures is the master of adding value.”
“Fatfish Ventures knows how it can identify the technology trend, the major consumer behaviour trend and invest in the major trend which could help the company (PeterLabs),” Lau told The Edge Financial Daily.
The animal health and nutrition products maker said Fatfish Ventures would chart out a strategic business direction for PeterLabs. However, the details are still being worked out.
“I was given a mandate by the board as an executive director to look out for the new business area for the company (PeterLabs) to help grow the company. So, Fatfish Ventures came in as a strategic shareholder to help PeterLabs.”
“We don’t know yet what is the area but hopefully after Chinese New Year we are able to find out. The area we are interested in has to be a technology-related business.
“For us to get various initiatives to enhance the company’s growth, we have to chart the direction over the next three months before executing it in the next 12 months,” explained Lau.
PeterLabs’ current core business is research and development, manufacturing and marketing of animal health and nutrition products for the agricultural and veterinary pharmacological industry.
“We are in [the] animal healthcare sector, so we might possibly look at nanotechnology [application] that we can bring into the sector to generate better yield,” he explained.
The products include animal feed additives, environment maintenance products, veterinary pharmaceuticals, complete feed premixes, biologicals, multi-nutrient and supplements, topical dressings and cleansing agents.
Putting on his Fatfish Ventures cap, Lau said PeterLabs has a potential to grow its business portfolio mainly due to the interesting underlying animal pharmaceutical business it operates, which is part of a biotechnology business.
“It (PeterLabs) has been growing steadily and has always been profitable. So, we think it has a stable income business that is proven from its track record,” he shared.
In April last year, Fatfish Ventures acquired 16 million ordinary shares via off-market transaction at a purchase consideration of 29 sen per share or RM4.64 million, which is equivalent to 7.7% of issued capital of PeterLabs.
Since then, PeterLabs’ share price has increased by about 15.5%, closing at 33.5 sen last Friday, giving it a market capitalisation of RM71.94 million. Over the past 12 months, the counter has gained about 45.15%.
Looking ahead, Lau said: “We are keen to increase our (Fatfish Ventures) stake in PeterLabs in the next six months.”
Fatfish Ventures had acquired its stake from PeterLabs’ co-founders — managing director Lim Tong Seng and executive director Teo Chin Heng.
Lim and Teo retain 5.78% and 8.49% stakes respectively in the company.
Looking ahead, shareholders will certainly hope to see this new business segment boost PeterLabs’ earnings. The company saw its net profit fall 22% to RM1 million in the third quarter ended Sept 30, 2017, from RM1.29 million a year ago, due to higher sales and marketing expenses incurred, especially marketing seminar expenses. Quarterly revenue increased 30% to RM26.95 million from RM20.79 million in the same period.
For the cumulative first nine months of financial year 2017, the group recorded a net profit of RM2.85 million compared with RM2.73 million last year, while revenue grew 20% to RM73.1 million from RM60.85 million a year earlier.
PeterLabs is currently trading at 20 times historical earnings.
“For me, I’m not so sensitive about the quarter-to-quarter results, but I am more interested in our annual results.
“For the current financial year ending Dec 31, 2018, we expect to maintain our current momentum. I won’t dare to say it will definitely, but hopefully we (Fatfish Ventures) will be able to enhance the financial performance of the company going forward,” he said.