$RHONEMA / 5278 (RHONE MA HOLDINGS BERHAD) AGM 2024

1. Food ingredients segment focuses on food commodities for confectionery, bakeries, manufacturers and so on, for human consumption. More towards trading of food commodities.

2. Animal health segment -0.8% growth due to drop in ruminant business, there were absence of some larger Build-Train-Handover dairy projects in the year prior.

3. Looking to explore more potential in human healthcare after getting their ISO 15189 certification for their lab, to offer services to hospitals. So far, even excluding covid-related push (from sale of test kits and etc), core business (for this segment) has been growing steadily over the years. Segment is still small for now.

4. Breaking down contribution of animal health segments: pets business (36% of revenue) is growing steadily and should continue to perform well. Feed additives 29%, Poultry 17%, ruminant 15%, swine 3%.

5. Export business to Philippines dropped, overall from RM 5.1m to 3.4m but managed to penetrate into some new markets. It’s worth noting, that all their exported products are of own brand and not 3rd party brands.

6. JDV about 75% completed as end April 2024. Revenue contribution to start coming in around 4Q 2025? Another ~RM 12mil investment expected in the JV company from Rhone Ma until completion, which is more than supported by own cash flow. Interestingly, the JDV bought the IP for Rhone Ma’s cattle feed formulation. In this JV, Rhone Ma (via Subsidiary A2 Fresh) will focus more on the technical know-how while Kulim will handle administrative matters.

7. Principal products are all imported (mainly from EU and US), and there are no plans for now to bring in production of these products into Malaysia. Most pet owners are not very price sensitive, and they are willing to pay premiums for top quality products instead of finding the “cheapest” options. NexGard products are still top selling in pet healthcare, with proven efficacy and ingredients and being recommended by many vets compared to cheaper alternatives.

8. The new Nilai GMP plant is currently running at around 40% utilisation, making non-pharmaceutical and vaccine products. They are currently running the stabilization tests for NPRA certification for products in the other half of the plant. If I understood correctly, Dr Lim mentioned that the NPRA certification requires proof that the products can be manufactured stably without defects for 18 months before commercialization, and they are almost done with the NPRA certification. That being said, it’s not like they can ramp up immediately. What kind of incremental earnings can they get? I’m not too clear on this, but it should nevertheless be a positive one. Near term focus is to gradually improve utilization of this new plant in stages.

9. Pig farm repopulation efforts are underway, with 2 shipments of live Danish pigs already made and a third one in progress. Only can import live pigs for now, as there are a lot of regulations for live animal specimens cross border. They are the exclusive distributor for DanBred in Malaysia. How much profit from the importation of pigs? Not much directly, but indirectly they also benefit from the repopulation in general (higher livestock population = bigger pie for everyone), as well as being able to offer veterinary and biosecurity services to the farms as add on services. Currently, swine makes up only a small portion of their business. They see that the swine population has stabilized after the major decline from the ASF outbreak and should recover slowly in time.

10. Batang Kali dairy farm still yet to expand to 500 heads, finding for more land to expand the barns (?), also refocusing resources to JDV since they got it