Peterlabs catches Fatfish Ventures
Entry of investment firm raises profile of little known biotech company
PETALING JAYA: Low profile Peterlabs Holdings Bhd rarely makes headlines but the entry of investment firm Fatfish Ventures Sdn Bhd is likely to change that.
Its parent company, Fatfish Internet Group Ltd, which is listed on the Australia Securities Exchange and has plans to float another firm on Sweden’s Stockholm Stock Exchange, had first set its eyes on Peterlabs last April.
Fatfish bought 7.7% of Peterlabs then, via an off-market transaction from its co-founders but only recently did Fatfish’s CEO emerge as a Peterlabs executive director.
Fatfish is involved in three business areas, namely technology incubator, venture development and cryptocurrency investments.
And now, 41-year-old Lau Kin Wai said the long term plan for Fatfish is to raise its stake in Peterlabs and gain control of the company.
Currently, Fatfish is the second largest shareholder of Peterlabs.
Fatfish is essentially a long term investor as it invests in businesses with its own balance sheet.
Since Fatfish does not manage funds, there is no limit on its investment timeline horizon.
“We like Peterlabs for its stable and profitable animal health and pharmaceutical business that enjoys an annual revenue growth of 5% to 10%.
“The area of business that it (Peterlabs) is in is becoming important due to the increasing awareness of food security.
“It is a biotech company which has room for growth, which explains why Peterlabs is on a quest to find a new growth strategy or fresh business opportunities,” said Lau, who noted that the food market is booming, in tandem with a growing population. As an executive director of Peterlabs, Lau is mandated with the task of securing a new business and be on the lookout for strategic opportunities for the group.
He is not involved in the day-to-day operations of the business.
The potential business or company that Peterlabs will acquire does not have to operate in the same industry, so long as it is an interesting technology business that can provide new business growth to the group, according to Lau.
While it is still too early for Lau to lay out future plans or ideas about the type of business Peterlabs intends to acquire, he hopes to narrow down the group’s choices by endMarch. Peterlabs could also potentially bank on Fatfish’s network in Sweden, Singapore, Indonesia, and Australia, for its export market. Peterlabs is targeting to venture into China this year.
In 2017, the group had expanded to Asia and Middle East markets.
Listed on the Ace Market in 2011, Peterlabs manufactures, distributes, and trades animal health and nutrition products.
Some 70% of Peterlabs’ revenue is derived from the trading of third party products, while the remaining 30% is derived from trading of its house brand.
The group registered a net profit of RM2.85mil for the nine months ended Sept 30, 2017, indicating a 4.6% growth from the corresponding period last year.
“Peterlabs is aiming to achieve 20% sales growth for 2018.
“This can be achieved without the need for a large amount of capital expenditure, as there is sufficient capacity of our warehouses and factories to cater for more expansions.
“The group’s plan is to grow its existing business and look at business opportunities outside of the existing area that we operate in,” said Lau.
The group has two plants, one in Klang and the other in Nilai.
The Klang plant is fully utilised, while the Nilai plant is at a utilisation rate of 50%, leaving Peterlabs sufficient capacity to grow its business without the need to build a new plant. Peterlabs currently trades at a price-earnings (PE) multiple of 19.8 times and has a market capitalisation of RM70.9mil.
Its peer, Rhone Ma Holdings Bhd, trades at a PE multiple of 12.3 times and has a market cap of RM149.4mil.
According to Peterlabs’ 2016 annual report, Malaysia is the largest market in terms of contribution to the group’s revenue.
Peterlabs also derives a significant portion of its revenue from Bangladesh.
Meanwhile, Fatfish invests in a total of 17 companies, and the median growth of its businesses stands at 35%.
Fatfish is preparing to list two companies over the next 18 months. Its private portfolio amounts to an estimated US$31.9mil.