Unit signs MoU with Dalian firm to boost growth
DALIAN: Banking on the rising popularity of herbal health supplements, Mesdaq-listed INS Bioscience Bhd is confident of sustaining strong earnings growth in the next five years.
To tap the global bio-herb market for better earnings growth, the company’s wholly-owned subsidiary, Easy Pha-max Marketing Sdn Bhd, recently signed a memorandum of understanding (MoU) with Dalian-based INS Xue Ao Pte Ltd, the biggest cordyceps-based products manufacturer in Asia.
Under the MoU, Easy Pha-max would be the sole global distributor of INS Xue Ao’s healthcare supplements. Meanwhile, INS Xue Ao would also market and distribute INS Bioscience’s products in China.
The signing was witnessed by Deputy Youth and Sports Minister Datuk Liow Tiong Lai and government officials, including the mayor, from the Dalian local authorities.
INS Bioscience chief executive officer Datuk Yeat Sew Chuong said the partnership would enable the group’s healthcare products to penetrate the Chinese market, which is projected to be one of the biggest in the world given its population size and its expanding aging group.
He added that its product portfolio would be enhanced by INS Xue Ao’s steady supply of a variety of cordyceps-based health supplements.
“It is a synergistic partnership. It is a win-win deal,” he told the media after the signing ceremony.
INS Xue Ao’s newly-completed plant in Dalian has the capacity of producing 350 tonnes of cordyceps-based products annually.
Its chief executive Lei Ming said he expected the plant to double its size by end-2008 on anticipated rising demand for cordyceps.
Yeat said cordyceps-based health supplements would be one of INS Bioscience’s core products, besides the wheatgrass supplements. He expects cordyceps-based products to account for 10% of the company’s revenue.
He said the World Bank forecast the global market for herbal products would reach US$5tril by 2050, with Asia constituting 17% of sales.
On the company’s earnings, Yeat said shareholders could expect to see “encouraging” earnings growth for the financial year ending Dec 31, and years after. “Shareholders would see revenue growth at a higher rate and an increase in earnings per share,” he added.
Last year, INS Bioscience incurred a net loss of RM12.65mil on revenue of RM23mil. It posted a net profit of RM418,000 on revenue of RM28.7mil for the six months ended June 30.
Yeat noted that the company had plans to transfer its listing status to the main board. However, it had yet to meet the listing requirements.
INS Bioscience owns a plant in Puchong, Selangor. “The plant is currently running at 40% capacity. There isn’t any plan for us to expand. There is still room to raise production volume,” said Yeat.
He said China or the US would possibly be the destination should the company intend to set up a new plant abroad.
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