4/19/2005 - Business Times (Malaysia) - ANTIOXIDANTS manufacturerCarotech Bhd plans to set up a second crude palm oil (CPO) processingplant to boost its production of tocotrienols, a CPO-based form of VitaminE.

Managing director David Ho said the company is holding discussions withseveral state authorities to determine the site for the proposed plant.

Carotech's existing plant in Chemor, Perak, was commissioned in 1995.

It processes 40 tonnes of CPO a day.

Speaking to reporters after Carotech's listing on Bursa Malaysia Bhdyesterday, Ho said the second plant need not be in the company's existinghome base in Perak.

Carotech, one of the leading suppliers of tocotrienols in the world,currently has about 75 per cent of the world market share of between US$13million and US$15 million (US$1 = RM3.80).

The US remains the leader in demand for tocotrienols with about US$10million.

Carotech's wholly-owned subsidiary, New Jersey-based Carotech Inc, is itssales and marketing arm for the US and Europe.

Carotech Inc vice president W.H. Leong said US demand for tocopherols,which can be found in most Vitamin E, is worth about US$400 million ayear. Both tocotrienols and tocopherol belong to the same family ofVitamin E. Carotech's tocotrienols are extracted from CPO, while someother tocotrienols are extracted from rice husk. The common tocopherolsare extracted from soyaoil.

"It is scientifically proven that tocotrienols are much more beneficialthan tocopherols.

"We believe that the US market is more matured and willing to tryalternative and complementary health care products," said Leong.

He said efforts have been taken to increase the awareness on tocotrienols,which include public relations campaign to key target audience such asopinion leaders in the industry. The company will also be continuing itsresearch and development to discover new benefits of its product to boostdemand.

TA Securities Holdings Bhd said in a research note that there is a hugeprice gap between Carotech's tocotrienols and soya tocopherols. It saidthe presence of substitute products has capped the pricing power ofCarotech should there be any fluctuation in CPO prices. According toLeong, Carotech's product is priced at US$650 a kg, while conventionalsoya Vitamin E is sold at US$40 a kg.

The research house said Carotech has diversified into Europe and Japan toreduce its dependency on the US market.

On its debut on Bursa Malaysia's Malaysian Exchange of Securities Dealing& Automated Quotation Bhd (Mesdaq) Market yesterday, the stock opened at47.5 sen, a premium of 7.5 sen against its offer price of 40 sen.

Carotech shares closed at 50 sen with 18.28 million shares traded. Itshigh for the day was 59 sen.

Chairman Datuk Ibrahim Ahmad said he believes the group will continue toperform well. Carotech hopes to hit a net profit RM7.2 million for thefinancial year ending June 30 2005. It made a RM6.27 million net profitfor the previous financial year.