KUALA LUMPUR: Poultry player Lay Hong Bhd, which has formed a 49:51 joint venture (JV) with Japan’s meat packing company NH Foods Ltd to expand its meat-based business abroad, plans to set up a RM30 million processed food plant in Selangor at end-2016.
Lay Hong executive director Yap Chor How said the plant is for research and development (R&D) and manufacturing.
“The initial investment is about RM30 million, expandable later on depending on performance,” he said after the signing of the JV agreement yesterday.
The initial authorised share capital of the JV company is RM30 million (30 million shares). NH Foods will hold 51%, while Lay Hong will take up 49%. Lay Hong’s stake will be funded internally, and via bank borrowings and/or additional funds to be raised from the capital market.
According to Yap, the new plant will likely be located in Kuala Selangor, close to Lay Hong’s existing poultry processing plant.
“The JV will start to contribute [to Lay Hong’s earnings] in [the] financial year ending March 31, 2017,” he said, adding that the JV is expected to significantly improve Lay Hong’s earnings in the long run.
He shared that the JV will be using raw materials from Lay Hong, while Lay Hong will make use of NH Foods’ existing network to export its products overseas. The target markets are the Middle East, countries within the Asean region and Japan.
“The role of Lay Hong is in operation and distribution, while NH Foods’ role will be in R&D, sales and exports,” he said.
The JV company will be named NHF Manufacturing (M) Sdn Bhd, and will operate under the brand name “Nippon Nutriplus”. Its product is expected to be out by mid-2016, he said. The partnership expects the net margin of the food manufacturing business to be about 4% to 5%.
To recap, NH Foods became a substantial shareholder of Lay Hong on Jan 8, after subscribing for a 9.09% stake in Lay Hong. It then acquired another 13.8% via a direct business transaction, bringing its direct interest in Lay Hong to 22.94%.
NH Foods vice president and representative director Yoshihide Hata said yesterday NH Foods will maintain its current stake quantum, though he did not dismiss the possibility that there may be revisions in the future — depending on the situation.
LAYHONG (9385) - Lay Hong to set up RM30m plant with new JV partner NH Foods
http://www.theedgemarkets.com/my/article/lay-hong-set-rm30m-plant-new-jv-partner-nh-foods
