Leong Hup to buy aquatic feed mill in Vietnam for RM67m

KUALA LUMPUR: 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 internally generated funds and bank borrowings.

The mill, currently producing only aquatic feed, can produce up to 118,800 tonnes of aquatic feed per annum, the group said in a filing with Bursa Malaysia yesterday.

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 building a new feed mill as the entire process requires a minimum of two years before production can begin,” said LHI.

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

Currently, LHI produces a wide range of feed products in Vietnam, including those for parent stock, broiler and layer chickens, as well as colour birds, ducks, cattle, goats, swines and quails.

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

“This acquisition offers us an opportunity to introduce feed products, capture more pockets of the region’s rising protein consumption [and] enable 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’s revenue from Vietnam increased 15.6% to RM374.4 million from 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 yesterday, valuing the group at RM2.46 billion.