Leong Hup confident of growth across its markets

  • Corporate News
  • Saturday, 27 Jun 2020

Leong Hup International's executive director Lau Tuang Nguang: “With a low base in these fast-growing economies, we are confident of growing faster than the average market growth rate in the regional countries. ”

PETALING JAYA: Integrated poultry producer Leong Hup International Bhd (LHI) remains confident of growth prospects across its markets, particularly in its developing markets like Indonesia, Vietnam and the Philippines.

Given the low base in fast-growing economies in the region, LHI executive director and group CEO Tan Sri Lau Tuang Nguang said the group intends to penetrate Myanmar and Cambodia once the Covid-19 pandemic is over.

“As long as the region’s economy keeps growing, so will the general income levels and hence, the consumption of protein.

“The average per capita consumption of poultry meat in Indonesia, Vietnam and the Philippines is still less than 15kg, as compared to Malaysia’s average per capita consumption of more than 50kg.

“With a low base in these fast-growing economies, we are confident of growing faster than the average market growth rate in the regional countries, ” Lau told members of the media after LHI’s first AGM yesterday.

Lau also shared that LHI was not significantly impacted by the Covid-19 pandemic and movement control order (MCO), as the group’s business was deemed as part of essential services and as such, continued to operate at normal capacities.

The MCO and Covid-19 caused a delay in farm expansion plans, while construction of LHI’s farms and feedmill was held back by only one to two months across all markets.

In Malaysia, LHI targets bakery chain The Baker’s Cottage (TBC) to contribute an estimated RM500mil to total group revenue by 2024, on the back of the aggressive expansion of TBC outlets to 300 by 2023.

Currently, LHI is in the process of setting up a training school in Muar, Johor for the TBC business, which is scheduled for completion in three months’ time.

Across the causeway, LHI will focus on growing the product range of its ready-to-eat segment and chicken nuggets, while expanding the brand’s presence in 7-Eleven and Cheers stores in Singapore.

As for the group’s Indonesian operations, LHI will continue to develop the downstream segment by building a new poultry processing plant at the end of the year.

The processing plant is slated for completion at end-2021 and will have a processing capacity of 600,000 chickens and 300,000 ducks per month.

In addition, the group plans to construct three breeder farms in 2021, with two in Java and one in Sumatera.

Hence, the total breeder capacity in LHI Indonesia is expected to increase by around 5% to 10%.

Meanwhile, LHI’s first feedmill in the Philippines is due for completion by year-end and will be operational by the first quarter of financial year 2021 (FY21).

Upon commencement of operations, the feedmill will have a utilisation of about 50%, which will enable the feedmill to break even within the first year.

Over in Vietnam, earnings from the group’s venture into the aquatic feed segment is expected to be reflected in the upcoming second-quarter FY20 results, as the aquatic feedmill was a producing asset at the point of acquisition.

The aquatic feedmill has a current annual production capacity of 118,800 tonnes.

Going forward, LHI targets to instal a new poultry feed line with a similar capacity in the same feedmill by year-end.

With the commencement of this new poultry feed line, the combined capacity will be 237,600 tonnes per annum from FY21, which could see an annual earnings contribution of 5% to 8% to LHI.

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