BIOHLDG (0179) Bioalpha sees maiden contribution from China health foods supply contract
KUALA LUMPUR (Oct 8): Bioalpha Holdings Bhd, which in July signed a RM2.1 billion contract to supply health food to China, recorded sales of over RM1 million from its first delivery made in September.
The delivery comprised health food ingredients for the preparation of health food and nutritional meals to be distributed to customers in Guizhou province, the company said in a statement today.
"The maiden contribution from the supply contract came in with sales of more than RM1 million for the month of September. This is just the beginning and we expect to receive more orders progressively," said Bioalpha managing director William Hon.
"Opportunities for health-related offerings in China are aplenty, especially in the wake of the pandemic outbreak. Moving forward, there are opportunities for us to expand the supply of products to other provinces in China as well," Hon added.
On July 22, the group's subsidiary Bioalpha (HK) Ltd signed a partnership agreement with China-based Guizhou Yuhexin Trading Ltd (Guizhou YHX) and Hainan Shifengfu Co Ltd (Hainan SFF), as well as a supply contract agreement with Guizhou YHX.
Under the agreements, Bioalpha partners with Guizhou YHX and Hainan SFF to supply health food and nutritional meals to private and public sectors in China. Bioalpha acts as the main contractor and technical adviser to source and supply ingredients for the health food offerings, while Hainan SFF leverages Bioalpha's expertise in formulation of the food products.
The supply contract is valued at 700 million yuan (RM427 million) annually for a duration of five years, subject to annual renewal. This translates into a potential contract value of up to 3.5 billion yuan (RM2.1 billion) over the five-year period.
Meanwhile, on its recently formed subsidiary in China, Bioalpha (Hainan) Health Biotechnology Ltd, Hon said the group has localised its operations in Hainan to ensure the order process will be done in a swift and efficient manner.
Further, it has also leased a factory in Hainan for warehousing purposes. The size of the factory is about 1,000 sq m.
Additionally, Bioalpha Hainan has also established an office in Hainan province's largest economic zone, which enjoys preferential policies of free trade zone.
"With our office located in the Yangpu Economic Development Zone, Bioalpha Hainan is eligible and shall apply for several tax and trade incentives such as exemption or reduction in value-added tax and reduction in corporate income tax, amongst others," said Hon.
Going forward, the group intends to set up more functions in Hainan, including packing and manufacturing.
"We are upbeat about the prospects of our venture in China. Looking ahead, we remain focused on executing our growth plans and will continue to work with our partners to further penetrate the Chinese market," said Hon.
Bioalpha's share price closed up 1.5 sen or 6.52% at 24.5 sen, bringing the group a market capitalisation of RM258.73 million.
Some 52.55 million shares changed hands, exceeding the stock's 200-day average volume of 42.04 million shares.