[POST Q2] BIOHLDG - Buy oooh HOLDING~

This will be a short write up about BIOHLDG. BIOHLDG appeared in my FB posts and also technical analysis in my blogs.

BIOHLDG appearing in my FB post dated 10 Aug 2017

BIOHLDG appeard in my blogspot on 3 May 2017 

BIOHLDG released its Q217 result on 23 August 2017. Revenue recorded increment of +10% yoy and +52% qoq while net profit recorded +77% yoy and +226% qoq.

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1. Fundamental Analysis

BIOHLDG Revenue and Net Profit

Q1 had been the weakest for BIOHLDG. As it grows stronger quarter by quarter, the strongest quarters are at Q3 and Q4 due to the year-end festive promotional activities[1]. For Q117, BIOHLDG recorded a loss of -RM 1,955k due to higher Share Issuance Scheme (SIS) (RM1.8 Mil) and once off corporate expenses in relations to Rights Issues (RM0.55 Mil)[2]. For me, SIS is a good motivation to their own staff, when the staff own the shares of the company, they will work harder. And in the end, their effort will be observed in the Income Statement and subsequently the share price. And the once-off expenses will only happen once. Hence, i believe in the next few coming years, the Q1 will have lesser chance to experience losses.

Extract from Q217[1]

If we compare the regional performance between first half of 2016 and first half of 2017, the export sales to Indonesia and China increased +19% and +30% respectively. This is aligned with what the management had been promising when they completed the corporate exercise of Rights Issue with Warrants on 10 January 2017. BIOHLDG will launch 27 new products across all 3 key markets - Indonesia, China and Malaysia as well as expansion of the agriculture business operations, and upgrading of machineries.

Regional Performance by Revenue (First Half of 2016 vs First Half of 2017)

For the Indonesia market, BIOHLDG target to launch 6 new products in each 2017 and 2018 respectively. A point to note, the new manufacturing facility in Kampar, Pekan Riau of Sumatra had been in operation. By having the production facility in Indonesia, it will shorten the otherwise lengthy new product registration product, hence enabling BIOHLDG to introduce more products in shorter time and grow the market share at a quicker pace[1].

For the China market, progressive and aggressive marketing campaign and participations in trade exhibitions had proven effective with encouraging sales growth. BIOHLDG had identified new target segment, whereby they will leverage on the "Halal" certified products in the Muslim-majority provinces such as Xinjiang, Qinghai, Shaanxi, and Gansu. And as retailers, we can see their activities in their FB page, Bioalpha Int. They are very transparent and they are actively expanding locally and also internationally.

Snapshot from Bioalpha Int FB

As for local Malaysia, BIOHLDG will unveil 5 new products in each 2017 and 2018 respectively. which will in the end enhance the product offering at Constant pharmacy outlets and other major pharmacies. The pharmacy business had been actively growing via franchising and already identified Kelantan, Johor and Kedah as new targets. As of to date, BIOHLDG had 3 franchise opening in Bangi, Selangor; Kota Bahru, Kelantan and Jerteh, Terengganu. Retail pharmacies recorded a decrease of -7.24% due to success franchised out of its outlet, which can be seen in the pie chart below.

Segmental Performance (Retail Pharmacies vs Manufacturing & Sales of Health Products) Comparing 1H2016 and 1H2017

As for the agriculture side, BIOHLDG begun Phase II land clearing of 879.5 acres in Pasir Raja, Dungun, Terengganu. The plantings will incldue Tongkat Ali, Kacip Fatimah, Betik Sekaki, Lada Hitam, Assam Gelugor and Kunyit which are in high demand. Do not forget they already have existing farms in Desaru Johor. Another point to note, BIOHLDG is in the process of making Investigational New Drug Application for clinical trials on human beings. All in all, BIOHLDG is optimistic on 2017 performance.

2. Technical Analysis

BIOHLDG Daily Chart

If we look at BIOHLDG daily chart. The SMA20 already crossed over SMA40, signifying a mid term bullish. The current resistance is at 0.275 while the support is at 0.245. If BIOHLDG had successfully conquered 0.275, then 0.3 will be the next resistance. Notice that there is an uptrend channel? Hopefully BIOHLDG will climb up gradually. BIOHLDG is good to operate as we have the RRR of 1:3, 1 portion of risk to 3 portion of rewards. Imagine if we operate (buy in) at 0.26, we have to cut loss if the chart closes below 0.245; if not, we can still hold as the chart had more upsides than downsides.

If you notice the recent shareholding changes, Perbadanan Nasional Berhad had been actively buying in BIOHLDG, maybe they had already know the QR will be better. Hence, they had bought in 24,015,600 shares, increasing their stakes to 10.884% with 87,8770,704 total shares[4].

Summary: 

BIOHLDG can buy ohh but need holding? As the name clearly states out the next action.. But again, remember the reason we buy is the reason we sell. More in depth analysis will be covered in the next coming posts. Stay tuned.

- BIOHLDG is expanding aggressively to China and Indonesia market by launching new products.
- The fundamentals of the company is looking good, a net cash company as BIOHLDG had just completed the corporate exercise of Rights Issue with warrant on January 2017.
- Perbadanan Nasional Berhad had been actively buying before the QR being announced.
- If we observe the trend, the Q1, will be the lowest, and a gradual increase will happen in Q2, Q3 and subsequently Q4. Q4 will be the highest due to year end festive season.
- The current support for BIOHLDG is 0.245 with the resistance of 0.3.
- BIOHLDG will be good to operate as the RRR is 1:3, 1 portion of risk with 3 portion of rewards, to cut loss at 0.245 and to take profit at 0.3.
- BIOHLDG is a growing company which worth to be in our watchlist and definitely requires holding for 2 years till the phase II in the agriculture farms in Terengganu harvests~
- Stay tuned for in depth coverage analysis about BIOHLDG in the next coming posts.

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Let's Ride the Wind and Gainvest

Gainvestor 10sai

24 August 2017

7.53am

Sources:

[1]: BIOHLDG Q217: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5523973
[2]: BIOHLDG Q117: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5445745
[3]: http://www.malaysiastock.biz/Corporate-Infomation.aspx?securityCode=0179
[4]: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5514441