Commodity prices like corn are coming down which should lower input prices

https://www.thestar.com.my/business/business-news/2023/06/15/fn-to-invest-at-least-rm1bil-in-first-phase-of-gemas-dairy-farm

There are various profit streams in the Jemaluang Dairy Valley project
1. Consulting/Construction profits
2. Maintenance/Management profits (continuing animal feed and nutrition products/services to the dairy valley)

275 hectares = 680 acres equivalent to c. 25% of FFB farm size of ~2800 acres (as at end Jan 2022)

Construction of the project expected to be completed by July 2024

Rhone Ma-Kulim joint venture to spearhead Jemaluang Dairy Valley project
06-04- 2023 09:15 PM

https://www.thesundaily.my/business/rhone-ma-kulim-joint-venture-to-spearhead-jemaluang-dairy-valley-project-HN10842050

No more price controls for chicken, eggs after June, says Mat Sabu

Tuesday, 21 Feb 2023, 6:37 PM MYT

KUALA LUMPUR: Prices of chicken and eggs are expected to be floated after June as part of the government's efforts to overcome the food shortage, says Agriculture and Food Security Minister Datuk Seri Mohamad Sabu.

He said the prices would be floated so that the Domestic Trade and Cost of Living Ministry could monitor and assess fluctuations in the prices of the goods compared to the current ceiling price.

"We are confident that the Agriculture and Food Security Ministry will satisfy the demand for chicken and eggs (through price floating) and even now it is sufficient but in five or six months' time, it will be more sufficient if no new undesirable matters (such as disasters) arise," he said when interviewed at his office here on Tuesday (Feb 21).

In January, Mohamad said that his ministry was studying the need to float the price of eggs in the market and provide targeted subsidies to the B40 group, and that discussions were being held with the Finance and Economy Ministries over the matter.

Full article: https://www.thestar.com.my/news/nation/2023/02/21/no-more-price-controls-for-chicken-eggs-after-june?fbclid=IwAR3wzRB2FKhZmJj-ZR9RXcMwerB2S8g6vNO1AVu4JgGrhB5TsOmTfFxGIgE

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Inflation is inevitable and price controls on essential staples do not work

$YENHER $RHONEMA $ANCOMNY $PLABS - Food Security as near to medium term investment theme

"Food security is an area that requires careful handling by governments. If not handled delicately, it could result in political instability..

Exacerbated by soaring commodity price, inflation pressure, food security have come under the spotlight.. Malaysia, is not spared.. despite being an exporter of chickens and eggs, the country experienced shortages..

According to the PM Anwar Ibrahim, the upcoming revised Budget 2023 to be tabled later this month will give emphasis on high food import bills and issues concerning food security..

Listed companies that could potentially benefit from adoption of modern agro-tech and agricultural best practices may include players that are involved in animal healthcare and agricultural chemicals such as.. (CONT)"

2nd Quarter 2022 was lower QoQ impacted by high raw material prices. The price of corn, soybean and wheat currently have all dropped significantly from the peaks in 2Q22. In addition 3Q and 4Q are traditionally stronger quarters...most importantly from a YoY basis (eg 2Q22 vs 2Q21 and 1Q22 vs 1Q21) Rhone continues to show double digit growth. FY2022 might be the year Rhone delivers record high profits (for comparison, the all time high share price was RM1.3x in 2017). The MD has recently started buying shares from the open market

FGV ventures into integrated dairy farm business in Chuping, eyes 100 million litres of fresh milk a year
theedgemarkets.com
August 08, 2022 11:07 am +08

https://www.theedgemarkets.com/article/fgv-ventures-integrated-dairy-farm-business-chuping-eyes-100-million-litres-fresh-milk-year

-Rhone is one of the leading Ruminant animal health and nutrition providers in the country

JCorp returns to the black in FY21, with PAT of RM379m
Bernama
August 02, 2022 16:50 pm +08

https://www.theedgemarkets.com/article/jcorp-returns-black-fy21-pat-rm379m

Rhone Ma is an animal health and nutrition specialist for the companion animals (cats and dogs) and agricultural livestock (poultry, ruminants and swine)

Food Protectionism & Security

https://klse1.i3investor.com/blogs/investing_for_the_future/2022-05-28-story-h1624105182-Bloomberg_News_A_global_stock_trader_s_guide_to_navigating_food_protect.jsp

In times of chaos, ensuring Food Security is paramount

Beautiful uptrend. Fresh milk provides the highest quality nutrition and there are simply no substitutes

Increasing coverage from research firms and institutional funds

Market to recognise the structural growth in the Group's business:
1) Dairy (Farm Fresh P/E 36x) - fresh milk provides the highest quality nutrition
2) Pets Health (Zoetis P/E 44x) - companion animals are a booming sector

Rhone Ma coverage by UOB Kay Hian

https://klse.i3investor.com/blogs/investing_for_the_future/2022-03-16-story-h1600276251-_Rhone_Ma_Dairy_Giant_In_The_Making_UOB_Kay_Hian_Report.jsp

The stock has suffered from the perception of being a 'pump-and-dump' stock in the past based on its share price history. And it is clear some here are buying with the expectation that the same thing will happen again, hoping to make a 'quick buck'. This is not the company for you

From the first foray into the ruminants and dairy milk sector, to the signing of the Kulim JV, and the fund raising for the milk processing plant, the speed at which Rhone has moved is a testament to the company's entrepreneurial drive and ability to execute. We are excited to be part of dairy cow farming (and much rather leave it to the animal health and ruminant experts in Rhone Ma and their partners in A2 Fresh (OLSB, NLN, NLF) than venturing on our own). Milk provides the highest quality nutrition and there are simply no substitutes. There is a reason why a mother's milk is all that a newborn child needs

Please refrain from commenting if you are unsure

Rhone Ma has raised RM13.46mil from its private placement which will be used for the construction of a 14.4mil litre per annum milk processing plant

The Rhone Ma Kulim JV of RM41mil will have a production of 11 million litres of fresh milk per year. Now do you even know what is Farm Fresh's fresh milk production per year from its own Malaysian farms

Historical PE 36x is derived from FYE 31 March 2021 adjusted profit of RM69mil derived after adjusting for the the one-off tax expenses of RM25.7mil, all of which is contained in the IPO Prospectus

Referring to the estimates on the 2000-3000 number of milking cows for the Kulim JV of RM41 mil, after assuming RM10 mil is used for the farm facilities, about RM30 mil would be available while AUD $3000 would get you the best quality pure breed Holstein milking cow (ie producing cow, as opposed to heifers or bulls). Those who attended Farm Fresh's analyst briefing 28/2 will be able to confirm the RM10k per dairy cow figure

If you're a trader it will be bad, but if you're a long term investor, you want it as low as possible

Hi teareader818, there are findings which I may or may not release as accumulation is ongoing and the proposition for Rhone Ma becomes more compelling as the Farm Fresh IPO progresses...

In the simplest terms,
1) at the IPO price of RM1.35 you are paying Farm Fresh RM2.5 bil for the amount of X milking cows it has and Y processing capacity (and compare this with Rhone Ma)
2) Out of the large offering of RM1bil in the IPO, RM700 mil will go to the promoters, with only RM300mil to be utilised by Farm Fresh, of which only RM200mil will be used for capacity expansion. In comparison, the Kulim JV has a cost of RM41 mil and Rhone Ma's milk processing plant will cost RM7.5mil, for a total cost of close to RM50mil. Comparing the capex of Farm Fresh of RM200mil vs Rhone Ma of RM50mil, should give you an indication of the scale and growth potential of Rhone Ma's dairy segment (note: fresh milk demand far exceeds supply)

Most importantly, you get all of this paying only RM140mil for Rhone Ma vs RM2.5bil for Farm Fresh (note: Kulim is backed by JCorp, both of which are orders of magnitude larger than Farm Fresh). Hope this helps, cheers

GM

Hi @teareader818
Based on production volume, biological assets (no. of milking cows), milk processing capacity (14.4mil litres), Kulim-JV of RM41 mil translating to 2,000-3,000 milking cows (cost per milking cow AUD3,000 or RM10,000) assuming RM10 mil is allocated for farm facilities and infrastructure, Rhone Ma is indeed grossly undervalued

Note Farm Fresh will IPO at a historical FYE 31 March 2021 of PE=36x* without taking into account the inevitable rise in share price (fresh milk is after all the highest quality nutrition as nature intended and like healthcare, nutrition standards only go one way, with the per capita consumption in developed countries at least 5-10 times higher than developing countries)
*2.5 bil market cap / 69 mil adjusted net profit (one off tax)

teareader818 @ Got_Milk, if Farm Fresh is priced at 1.35, is Rhonema undervalued?

Dairy prices amid the Russia-Ukraine war and geopolitical tensions

https://klse.i3investor.com/blogs/investing_for_the_future/2022-02-27-story-h1599325638-__RhoneMa___FarmFresh_IPO___Dairy_prices_jump_4_2__at_auction_to_hit_th.jsp

Farm Fresh inks IPO underwriting agreement
theedgemarkets.com
February 15, 2022 12:54 pm +08

https://www.theedgemarkets.com/article/farm-fresh-inks-ipo-underwriting-agreement

KUALA LUMPUR (Feb 15): Dairy producer Farm Fresh Bhd has signed an underwriting agreement in conjunction with its initial public offering (IPO) on the Main Market of Bursa Malaysia Securities.

In a statement on Tuesday (Feb 15), Farm Fresh said it signed the agreement with CIMB Investment Bank Bhd (CIMB IB), Maybank Investment Bank Bhd, Affin Hwang Investment Bank Bhd, AmInvestment Bank Bhd, Hong Leong Investment Bank Bhd and RHB Investment Bank Bhd.

The IPO — of up to 743.2 million ordinary shares in Farm Fresh — comprises an offer for sale of up to 520.2 million existing shares (offer shares) and a public issue of 223 million new shares.

The 743.2 million IPO shares comprise an institutional offering of up to 687.4 million IPO shares and a retail offering of 55.7 million issue shares.

Farm Fresh is expected to be listed in the first quarter of 2022.

https://www.theedgemarkets.com/article/farm-fresh-inks-ipo-underwriting-agreement

AIA, Aberdeen Said to Be Among Cornerstones in Farm Fresh IPO
- Malaysian dairy producer seeking about $239 million [RM 1 billion] from sale
- Great Eastern Life, Templeton also among about 30 investors
February 11, 2022, 5:03 PM GMT+8

Malaysian dairy producer Farm Fresh Bhd. has attracted almost 30 cornerstone investors including Aberdeen Standard Investments and AIA Group Ltd. in a planned initial public offering, according to people with knowledge of the matter.

Great Eastern Life Assurance, Franklin Templeton Investment and some Malaysian state funds have also signed on, the people said, asking not to be identified discussing confidential information. The first-time share sale is expected to raise about 1 billion ringgit ($239 million), the people said.

https://www.bloomberg.com/news/articles/2022-02-11/aia-aberdeen-said-to-be-among-cornerstones-in-farm-fresh-ipo

With the FarmFresh IPO, Mr Market and the public will finally realize that:

Fresh Milk = Liquid Gold

Rhonema a billon dollar company in the making. Fully integrated dairy producer - upstream, midstream and downstream

>> Malaysia's consumption of fresh dairy milk is limited not by demand, but rather by supply. If you live in the Klang Valley, just walk into any quick grocer that sells Fresh Milk. Buy the 1 litre (not UHT). Drink 150-200ml per day which approximates the countries average consumption of milk and milk products, ie finish within 5 days (although you are advised to finish within 3 for maximum freshness). Then walk in again to the quick grocer. You will find that the fresh milk is no longer in stock. That alone tells you everything you need to know

Posted by Sslee > Jan 31, 2022 6:26 AM | Report Abuse
Is Malaysia a milk drinking country?
Why not buying palm oil plantation companies when CPO price went through the roof?


>> There are no substitutes for Fresh dairy milk. Soy or alternatives like almond are not equivalent, in terms of nutritional content/quality, nor nutritional availability

Posted by Tobby > Jan 31, 2022 6:46 AM | Report Abuse
Malaysians are not avid milk drinkers! Then again, this may see price increase in many of milk related products like sweeten milk, baby food, cakes, and so forth!
This may lead to some manufacturers to switch to soya to replace milk!
Anyway, do you know that soya is now used to produce fake beef! And it taste better than real beef! Try beyond beef! You will be converted to become vegan!

Response>> “What goes up must come down" - Isaac Newton

Posted by Tobby > Feb 7, 2022 2:02 AM | Report Abuse
I think you need to find other fengshui master! Clearly she doesn't know about stocks! I suggest one near Central Market! Very chun! The year of the Tiger is oil and steel! But i guess those hongkie fengshui masters nowadays are out of business! Busy rearranging clients toilet position!

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Response>> Oil palm plantations may or may not be beset by things that even the heavenly stars are unable to overcome...

Posted by ahbah > Feb 7, 2022 12:19 PM | Report Abuse
For the Year of the Water Tiger 2022, the picks are:
Top Element: Wood
Stocks : Taann n plantation stocks which are made of wood.

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Response>> Maybe you can share with us your predictions, oracle of bursa...

Posted by gohkimhock > Feb 7, 2022 12:52 PM | Report Abuse
Everybody has his own self-interest in the name of fengshui. Nobody here truly understand 阴阳五行. Simply interpreting fengshui according to their modus operandi. Pathetic..

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Response>> Indeed, Agriculture led to the dawn of civilisation when Mankind no longer had to worry about food...

Posted by Johnzhang > Feb 7, 2022 1:09 PM | Report Abuse
This year is the year for Agriculture! The world will be struggling to produce enough to feed the world . Wild climate will adversely affect agriculture production.

Gong Xi Fa Cai 恭喜发财

Maybank's Feng Shui Guide to Prosperity 2022 Year of the Water Tiger:

https://klse.i3investor.com/blogs/investing_for_the_future/2022-02-06-story-h1598338788-Maybank_s_Feng_Shui_Guide_to_Prosperity_2022_Element_Sector_Winner_Pick.jsp

Physical store retailers are in terminal decline, in other words a sunset industry

Far more rewarding to invest for the future in a company with structural growth drivers that are only just unfolding:

Global dairy milk prices
https://klse.i3investor.com/blogs/investing_for_the_future/2022-01-30-story-h1598247490-_Rhonema_Global_dairy_prices_hit_8_year_high_as_supply_tightens_milk_pa.jsp

Global dairy market prices

https://klse.i3investor.com/blogs/investing_for_the_future/2022-01-30-story-h1598247490-_Rhonema_Global_dairy_prices_hit_8_year_high_as_supply_tightens_milk_pa.jsp

Rhone Ma inaugurates high quality animal health products factory in Nilai
25 / 01 / 2022 10:34 PM

NILAI, Jan 25 -- In line with efforts to strengthen food security and national biosecurity control, animal nutrition and health manufacturer Rhone Ma Holdings Bhd today inaugurated a new factory at a cost of RM40 million at the Nilai Utama Industrial Estate here.

Managing director Dr Lim Ban Keong said the plant, which started operations in April last year, not only produced high quality and safe animal health and nutrition products for the national market but also exported to Southeast Asian countries including Thailand, Indonesia and Myanmar.

“We are also in the process of applying for a Good Manufacturing Practice (GMP) licence from the National Pharmaceutical Regulatory Agency (NPRA) which is expected to be obtained in the second quarter of 2022.

“Since starting operations, this factory has achieved more than 35 per cent production. Our target is to achieve 100 per cent next year, thus increasing the annual production capacity by four times or 2,500 tonnes from the existing one,” he said.

He added that their first plant in Petaling Jaya, Selangor has a GMP licence.

He was speaking to reporters at the opening ceremony of the good manufacturing practice standards factory which was officiated by Negeri Sembilan Menteri Besar Datuk Seri Aminuddin Harun and also attended by veterinary director-general Datuk Dr Norlizan Mohd Noor.

Meanwhile, Dr Lim said animal health and nutrition products produced at his factory used its own Rhone Ma brand with Thailand being the largest market, contributed about 48 per cent to their total export earnings last year.

“We also intend to market this product in Taiwan and China. The good response received from foreign markets proves that Malaysian-made products are of high quality, comparable to international products,” he said.

Meanwhile, Aminuddin said Rhone Ma made the right decision to choose Negeri Sembilan as the factory site because of its strategic location close to Kuala Lumpur, the Klang Valley and Putrajaya which is the country's administrative centre.

Apart from that, he said the location was also excellent and provided infrastructure facilities such as excellent road network, electricity, water supply and a competitive telecommunications infrastructure, thus helping Rhone Ma provide the best integrated animal health solutions.

Clearly, establishing the factory has also created many job opportunities for locals and equipping them with competitive skills that are useful for the future.

“I understand that since this factory started operating in April 2021, this company has employed 100 per cent locals. Thank you," he said.

-- BERNAMA


https://www.bernama.com/en/news.php?id=2046624

The way one writes elucidates ones thought process (or what you term as 'mental models') which for you is all over the place

Petrochemical feedstock costs are rising while higher selling prices are only temporary due to reopening/restocking after the long pandemic induced lockdowns, like what is happening in the automotive chips sector

You want to be at the upstream, the actual producers of the commodities, not the mid-down stream

However, we know that commodities are cyclical - palm oil, crude oil, steel etc. What goes up must come down

Milk (fresh milk especially) however is different. Although fresh milk is in effect a commodity (though rarely seen as so due to its shelf life etc), there are other external, structural factors in force, including the: 1)huge domestic demand vs domestic supply deficit, whose gap is growing

2)Logistics costs (cold chain*) associated with importation (large part of the countries' fresh milk demand is met by Australian/New Zealand imports) with current container costs going through the roof
*https://www.kyvalleydairy.com.au/export

(If you scroll down, you'll see an image that is very telling...)
3)foreign exchange rates, amongst other structural factors

Hope you learned something today

GM

Ancom ventures into agrichemical, animal health businesses
28 December 2021 09:02 PM

PETALING JAYA: Ancom Bhd’s wholly owned subsidiary, Ancom Crop Care Sdn Bhd, has entered into several share sale agreements to acquire a 80% stake each in Shennong Animal Health (Malaysia) Sdn Bhd and Vemedim Sdn Bhd for RM23.92 million cash.

Shennong Group is principally involved in the manufacturing and trading of chemical and animal health products which encompass livestock-related antibiotics, feed additives, supplements, and disinfectants mainly for the domestic market.

“As global economies cope with the rising inflation and food prices, we believe businesses that are critical in helping to sustain and secure supply of livestock, such as Shennong Group, are primed for growth. Locally, we are witnessing initiatives by the government to improve the country’s self-sufficiency level. Based on market research, Malaysia’s animal health and nutrition market is poised to grow at a compounded annual growth rate of 4.3% between 2020 and 2025.

https://www.thesundaily.my/home/ancom-ventures-into-agri-chemical-animal-health-businesses-JC8703579

KLSE: ANCOM RM3.11 +0.18 (+6.14%) today
28 Dec, 5:00 pm MYT