HOVID-WA

PETALING JAYA: Carotech Bhd will see the entrance of a few white knights should its regularisation plan be approved by the relevant authorities, according to its group managing director David Ho.

He said that they were high-net worth Malaysian individuals who were attracted to Carotech's business model especially with the growing demand for carotenoids and tocotrienols.

“I will remain managing director and continue to run the operations of the company. They (the white knights) want me to run the show. The business model of the company does not change,” said Ho.

He added that demand for tocotrienols had improved partially because of good clinical trials results.

Carotech is in the business of commercially extracting tocotrienol complex, mixed carotene complex and phytosterols from crude palm oil. It exports to the United States, Europe, Japan and Australia. Carotech also produces biodiesel.

“Tocotrienols has been found to be good for fatty liver and end stage liver diseases,” said Ho.

Ho added that another attraction of the company was the potential of the B5 programme, where Carotech would eventually be able to sell more biodiesel in Malaysia. Carotech currently exports the bulk of its biodiesel and only supplies small quantities within Malaysia.

The B5 biodiesel in Malaysia consists of the blending of 5% palm methyl ester with diesel.

The palm oil-based B5 biodiesel programme began on June 1 last year, where the fuel was made available in selected petrol kiosks. The implementation of B5 in other regions in the peninsula as well as in Sabah and Sarawak as part of the planned nationwide coverage is being staggered by the Government.

When Carotech was listed in 2005, it was seen as an exciting biodiesel play as soaring crude oil and the sustainability of fossil fuels made biodiesel the next big thing.

The company had been making losses in the last three financial years. For its first quarter to Sept 30, 2011, it posted a net loss of RM16.23mil from a net profit of RM2.87mil, while revenue was up 25% to RM12.99mil.

Carotechis proposing its regularisation plan to remove the company from the list of GN3 status companies, which it has been placed since Oct 29, 2010.

Under a placement exercise of the regularisation plan, Carotech's parent - Hovid Bhd's stake would be reduced to 6.4% from 17.6%.

//Latest Hovid Annual Report reveals Hovid is actually quite profitable, but being dragged into financial turmoil by Carotech. http://www.hovid.com/userfiles/file/Hovid%20AR%202011.pdf

With Carotec being rescued, and Hovid lowering down their holdings, Hovid will again return to profitability.
Smart move!