“Citing independent market researcher SMITH ZANDER International Sdn Bhd, HLIB expects the health supplements industry in Malaysia, Indonesia and China to expand at double-digit growth.”

PETALING JAYA: Integrated health supplements company Bioalpha Holdings Bhd’s Pasir Raja Herbal Park (PRHP) in Terengganu is expected to generate revenue for the company from as early as this year.

CIMB Research said in a report that the 1,000-acre park would start churning marginal revenue from this year, adding that earnings could turn significant by 2020 onwards.

“About 124 acres of land has been cleared so far in PRHP and the remaining 880 acres are due to be cleared by end-2018. Planned capital expenditure is RM5mil over the next 18 months,” the research house said following a recent site visit to the park.

According to CIMB, various herbs such as Kacip Fatimah, Tongkat Ali, roselle, ginger, lemongrass, papaya, coconut and black pepper have been planted on the cleared portion of the land.

“While it may only take one year for a papaya tree to mature, it takes five to seven years for coconut trees and Tongkat Ali plants.

“We estimate the current average selling price (ASP) of raw materials from PRHP is around RM3 per kg and we expect ASP to gradually rise as the plantation matures over the next few years.”

The research house said Bioalpha targetted production of only 200 tonnes of raw materials from PRHP by this year.

“Assuming ASP of RM3 per kg, we estimate revenue from PRHP this year would be only RM600,000 and pre-tax profit of RM300,000.

“However, by 2020, PRHP production could rise to 2,000 tonnes per annum. Assuming a conservative ASP of RM3 per kg, we project PRHP revenue of RM6mil and pre-tax profit of RM3mil.

“We have not assumed any earnings from PRHP in our earnings forecasts,” it said.

Bioalpha shares closed half-a-sen up to 26 sen yesterday.

Meanwhile, Hong Leong Investment Bank (HLIB) said Bioalpha is the largest operator of herbal parks in Malaysia. Other than Terengganu, it also has land in Desaru, Johor.

“As at the first half of 2017, the local market contributed about 46% to revenue while the rest were contributed mainly by Indonesia (31%) and China (23%).

“The group believes China and Indonesia export markets are set to lead export revenue growth,” it said.

Citing independent market researcher SMITH ZANDER International Sdn Bhd, HLIB expects the health supplements industry in Malaysia, Indonesia and China to expand at double-digit growth.

“In Malaysia, the size of health supplements manufacturing industry is expected to grow at a compound annual growth rate (CAGR) of 11.5% between 2016 and 2018, reaching a market size of RM1.38 trillion by 2018.

“Meanwhile, in Indonesia and China, the health supplements market has a prospective CAGR of 12.7% and 33.5% to reach US$2.13 trillion (RM8.9 trillion) and US$221bil (RM927 bil), respectively.”

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