Leong Hup to buy aquatic feed mill in Vietnam for RM67m

KUALA LUMPUR (March 9): Malaysia’s largest fully integrated poultry producer, Leong Hup International Bhd (LHI), is acquiring a feed mill in Vietnam for RM67.03 million to diversify into aquatic feed.

LHI said the acquisition will be financed through a combination of internally generated funds and bank borrowings.

The mill, which currently produces only aquatic feed, has the capacity to produce up to 118,800 tonnes of aquatic feed per annum, the group said in a filing today.

LHI added that it has plans to enhance the mill’s capacity and begin poultry feed production by end-2020.

“The proposed acquisition would substantially reduce the time needed for sourcing for suitable land and construction of a new feed mill as the entire process requires a minimum period of two years before production can begin,” said LHI.

The group noted that the production of aquatic feed complements and extends the offerings of LHI’s range of feed products.

Currently, LHI produce a wide range of feed products in Vietnam, including those for parent stock chickens, broiler chickens, layer chickens, colour birds, ducks, cattle, goats, swine and quail.

“Vietnam is one of LHI’s burgeoning markets in Southeast Asia and we continue to sharpen our focus on expanding our growth in this region,” said LHI group chief executive officer Tan Sri Francis Lau.

“This acquisition presents us with an opportunity to introduce feed products [as well as] capture more pockets of the region’s rising protein consumption and enables us to strengthen our market position in Vietnam, particularly around the southern region,” he added.

In its financial results for the fourth quarter ended Dec 31, 2019 announced recently, LHI had reported a 15.6% gain in revenue from Vietnam to RM374.4 million, against RM323.75 million a year ago, led by feed sales volume.

“The latest acquisition is expected to drive the group’s feed sales volume further,” it added.

LHI’s share price closed down 1.5 sen or 2.2% at 67.5 sen today, valuing the group at RM2.46 billion.