KUALA LUMPUR: Bioalpha Holdings Bhd (BHB) is further solidifying its presence in China as it commences delivery of health food ingredients for the preparation of nutritional meals to be distributed to the customers in the Guizhou province in China.
This following a partnership agreement entered between Bioalpha (HK) Ltd (BHK), a wholly-owned subsidiary of BHB, and two China-based companies, Guizhou Yuhexin Trading Ltd (GYT) and Hainan Shifengfu Co Ltd (HSC), as well as a supply contract agreement with GYT on 22 July 2020.
BHB managing director William Hon said the company is pleased to update that the partnership with its China counterparties has started contributing to BHB's financial performance as the company commence fulfilment and delivery of customer's orders to the Guizhou province since end-September 2020.
"The health food ingredients we supply include multigrain, amongst others," he said in a statement today.
To recap, under the agreements, BHB partners with GYT and HSC to supply health food and nutritional meals to private and public sectors in China.
BHB acts as the main contractor and technical advisor to source and supply ingredients for the health food offerings, while HSC leverages on BHB's expertise in formulation of the food products.
These ingredients enhance the nutritional value of meals and will be used for the preparation of health food and meals, to be distributed to customers in the private and public sectors in Guizhou for consumption.
"The maiden contribution from the supply contract came in with sales of more than RM1 million for the month of September.
"This is just the beginning and we expect to receive more orders progressively. Opportunities for health-related
offerings in China are aplenty, especially in the wake of the pandemic outbreak.
"Moving forward, there are opportunities for us to expand the supply of products to other provinces in China as well," William said.
The supply contract is valued at RMB700 million (approximately RM426.7 million) annually for a duration of 5 years, subject to annual renewal.
This translates to a potential contract value of up to RMB3.5 billion or RM2.1 billion over a 5-year period.
As part of its strategic move, BHK had on 26 August 2020 incorporated a new wholly-owned subsidiary in Hainan, Bioalpha (Hainan) Health Biotechnology Ltd (BHH), with an authorised share capital and intended paid-up capital of RMB15 million respectively.
The principal activities of BHH are in the areas of health food production, import and export, food products trading and selling, pharmaceutical goods production, import and export, production, sales, processing, transportation, storage and other related services of agricultural products.
"We have localised our operations in Hainan in order to process the orders more swiftly and efficiently. We are delighted to inform that our plans are on track with operations running smoothly currently.
"We have leased a factory in Hainan with the size of approximately 1,000 square meters (or about 10,800 square feet) for warehousing purposes.
"Going forward, we intend to set up more functions in Hainan, including packing and manufacturing, as we progress further," William said further.
Additionally, BHH has also established an office in the Yangpu Economic Development Zone located in the Hainan province of China.
The development zone is Hainan's largest economic zone and enjoys preferential policies of free trade zone as approved by the State Council of China in 1992.
"With our office located in the Yangpu Economic Development Zone, BHH is eligible and shall apply for several tax and trade incentives such as exemption or reduction in value-added tax and reduction in corporate income tax, amongst others.
"In summary, we are upbeat on the prospects of our venture in China. Looking ahead, we remain focused on executing our growth plans and will continue to work with our partners to further penetrate the Chinese market," he said.