Company profile
Ritamix Global is a Malaysian company founded in 1982, mainly distributes animal feed additives and fewer human food ingredients in Malaysia, and produces more than 150 own-brand animal feed additive premixes for sale in Malaysia and overseas. For the three years ended December 31, 2019, the company's distribution business involved more than 300 branded products from more than 70 suppliers. According to the Ipsos report, the company is the third largest participant in the Malaysian animal feed additive market based on 2018 revenue, with a market share of about 12.78 per cent.
Sino-Thai viewpoint
The future growth of Malaysia's animal feed additive market is moderate: driven by the animal husbandry's heavy dependence on products and the growing demand for high-quality meat products, Malaysia's animal feed additive market is expected to continue to grow steadily, with a compound annual growth rate of 4.2% from 2019 to 2023, according to the Ipsos report. Among them, the total value of comprehensive premix products in the animal feed additive market is expected to grow steadily at an annual compound growth rate of about 5.4% from 2019 to 2023. In addition, due to the recent outbreaks of diseases such as bird flu and African classical swine fever, the market demand for vitamin premix products to improve animal feeding health has increased, and product prices will gradually rise.
In terms of operating performance: from 2017 to 2019, the company's operating income was 108 million ringgit, 129 million ringgit and 126 million ringgit respectively, mostly from Malaysia (about 87.2% in 2019). The proportion of revenue from distribution business is about 69.9%, 64.3% and 62.3%, the proportion of revenue from production business is increasing year by year, and the sales volume of own-brand products continues to increase. The gross profit margin was 20.9%, 28.3% and 23.2%, respectively. The decline in gross profit margin in 19 years was mainly due to the company's higher gross profit margin in 2017 and 2018 due to the shortage of ingredients in the global vitamin An and vitamin E market. As the production plant of BASF, one of the world's largest suppliers of vitamin An and vitamin E, resumed operation in July 2018 and the market prices of vitamin An and vitamin E were normal, the gross profit margin decreased. In addition, African classical swine fever caused competitors to export some vitamin products for domestic sale, which intensified competition in the Malaysian market also affected gross profit margin. Gross profit margin of both distribution business and production business decreased. The net interest rates were 10.0%, 12.4% and 10.9% respectively, corresponding to the decline in gross profit margin in 2019.
Valuation: based on 500 million shares after the global public offering, the company's market capitalization is HK $500 million to HK $600 million, which is lower than the average of Hong Kong equities. In 19 years, the price-to-earnings ratio of the company is about 19.2-23.0 times, which is higher than the industry average; the price-to-book ratio is about 2.04-2.26 times, which is higher than the industry average. In terms of profitability, the ROE and ROA in 19 years were 16.3% and 14.3% respectively, higher than the industry average. The sponsor's 19-year track record fell 2, and the company brought in two cornerstone investors to subscribe for a total of about HK $36 million. Taking into account market competition, industry development and the company's performance and valuation, we give it a score of 56, with a rating of "not applying for purchase".
Risk tips: (1) intensified market competition, (2) natural disasters or epidemic situations, (3) dependence on animal husbandry