Leong Hup Seeks to Grow

MALAYSIA - Poultry company, Leong Hup, says it is looking for synergistic business opportunties.
calendar icon 16 September 2010
clock icon 4 minute read

Leong Hup Holdings Bhd (LHH) is always on the look-out to acquire business operations that are synergistic and will contribute positively to its long term earnings, reports StarBiz of Malaysia.

Executive director, Tan Sri Francis Lau Tuang Nguang, said the company would continue to focus on further strengthening and developing its broiler segment in the country.

He said this could be done by acquiring existing small and medium broilers or establishing joint-ventures with them.

Francis Lau is confident of good prospects for Malaysia's poultry producers. After the company AGM and EGM yesterday, he told StarBiz: "Malaysia still offers good prospects for companies rearing chickens for their meat as the country’s chicken consumption is the highest in the region at 38kg per capita."

Shareholders at the EGM approved the proposed acquisition of the entire issued and paid-up capital of 5.09 million shares in Ladang Ternakan Maju Sdn Bhd (LTM) for 10.84 million ringgit (MYR), to be satisified by 10.333 million new LHH shares at MYR1.05 each.

With LTM becoming a wholly-owned subsidiary of LHH, LHH's annual production of day-old chicks would increase to 134 million from 124 million now, said Mr Lau.

He said LHH's production of broiler chickens would also rise to about 49 million yearly from 40 million, and its market share in broiler farming in Malaysia would expand to 10 per cent from eight per cent.

According to StarBiz, he said figures by the Federation of Livestock Farmers' Associations of Malaysia in 2008 showed that over 3,000 broiler farms in the peninsula produced about 491 million birds.

Presently, LHH has more than 80 broilers farms in the peninsula, mostly located in Johor, Perak, Selangor, Malacca and Negri Sembilan while LTM's farms are mainly in Perak and Selangor.

Mr Lau explained: "Having poultry farms in most major locations in the peninsula can reduce transportation costs when delivering the birds to our clients and curtail the chances of infectious disease outbreaks in the farms."

He added that chicken meat remains the cheapest source of protein in Malaysia and with celebrations by the four major ethnic groups throughout the year, chicken meat will remain popular.

Mr Lau said that the strength of the ringgit against the US dollar in recent months is a blessing as the company imported 95 per cent of its raw materials from Argentina, China, South Africa and the United States, with the purchases denominated in the US dollar.

However, despite cheaper raw materials, the company was optimistically cautious due to drought in Russia and major floods in Pakistan which might see increased demand for wheat from these countries.

Mr Lau said if demand for wheat from these countries rocketed in the coming months, major wheat producers might have problems coping with demand and this would also affect other importing countries such as Malaysia.

StarBiz reports that for the financial year ended 31 March, LHH recorded a net profit of MYR57.13 million and revenue of MYR1.142 billion against MYR36.26 million and MYR1.141 billion, respectively, in FY2009. For the first quarter to 30 June, it posted a lower net profit of MYR10.05 million, despite an improved revenue of MYR294.8 million compared with MYR13.22 million in net profit and MYR280.61 million in revenue a year earlier.

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