Food supplements is good business for PeterLabs

BELIEVE it or not, the business of making vitamins and supplements for fish can be a big business. And there are companies whose very business model thrives on this. One of them is PeterLabs Holdings Bhd, an animal health and nutrition products maker which is slated to be listed on the ACE Market of Bursa Malaysia on July 26.

According to PeterLabs executive director Dr KC Teo, even shrimps require feed additives. With that, he says the company is diversifying into acquaculture to capture the vast opportunity in the marine market.

PeterLabs is involved in the manufacture, distribution, and trading of animal health and nutrition products such as animal feed additives, environment maintenance products and veterinary pharmaceuticals.

“We are trying to develop and enhance our additives for the aquaculture industry. It (acquaculture) is still a developing industry compared with Thailand,” he tells StarBizWeek in an interview.

A veterinarian by training, Dr Teo says the additives, or vitamins and supplements in layman terms are meant to improve the health of the animals which are consumed by people. “The lifestyle which demands better quality and safe food is changing the landscape for the poultry industry to produce healthier food,” he adds.

Dr Teo says it’s a good time for the group, which is already trading some additives for the acquaculture industry, to come up with its own products. He says PeterLabs was looking to introduce its additives for acquaculture by the middle of next year and it was currently conducting trials in some products.

Managing director T S Lim says its products are used by livestock breeders and animal farms for large scale production of poultry, swine, ruminant, aquaculture and companion animals.

Apart from expanding its products portfolio, Lim says PeterLabs is also looking at penetrating new exports markets such as Bangladesh, Indonesia and Saudi Arabia.

“We are still in the negotiation stage with Bangladesh,” Lim says, adding that it exports a small percentage to Pakistan, Nepal, Thailand and Taiwan.

PeterLabs has been actively participating in overseas tradeshows to promote the group’s products and to build up contacts.

Although the Government is only expected to implement the Good Manufacturing Practice (GMP) next year, PeterLabs has complied with all of its requirements, thus giving it an early advantage, Lim says.

He says its new plant in Nilai which is GMP-certified would open up new opportunities for the group for markets that are stringent. He adds that it would also create opportunity for its competitors who are non-GMP compliance to contract out their production to PeterLabs.

The GMP certification would assure customers that products are manufactured in a hygienic manner and follow best practices in manufacturing.

“The GMP is to fulfill the stringent requirement imposed by countries on foreign companies before the products can be marketed there,” Lim says.

Dr Teo says it had received pre-licence with a satisfactory status. The licence will only come in next year as the GMP-accreditation board for related purposes was currently being set up.

PeterLabs currently has a non-GMP-compliant factory in Shah Alam, thus the group has started moving its production progressively to its new RM12.5mil plant in Nilai. The old plant will be closed down once the production has been fully integrated into the new plant.

PeterLabs corporate advisor Dr Christopher Goy says it had shifted about 70% and has already been phasing off its production at Shah Alam in stages. If needed, the group has vast tract of land at its Nilai factory for expansion plan.

Goy says once it moved over to Nilai, the plant’s total capacity would be 50% thus providing room for further expansion.

PeterLabs currently has a 19.1% market share in the animal feed additives market locally in 2010. According to IMR Report by Protege Associates, the local animal health and nutrition market was valued at RM529mil in 2009.

PeterLabs posted an average annual growth rate of 17% and 37% in revenue and net profit respectively. For the financial year ended Dec 31, 2010 (FY10), PeterLabs posted a net profit of RM5.95mil on revenue of RM40.7mil. Its net-profit margin increased to 14.6% in FY10 from 13% in FY09.

Lim says the company expects better performance due to its expansion plans such as venturing into new products portfolio, new exports market and new manufacturing plant.

The listing exercise involves a public issue of 15 million new shares at 30 sen a piece. An offer for sale of about 35.9 million shares will be allocated to identified investors.

The company’s financial controller Evone Yap says it does not have a dividend policy in place right now but it plans to pay out 30% of its net profit to shareholders in future.