KUALA LUMPUR: XingHe Holdings Bhd plans to expand its marine shrimp aquaculture operation next year, which is expected to contribute about RM30 million to its topline.
The expansion involves cultivation of Vannamei, or whiteleg shrimp or king prawn, through new aquisitions of farms and breeding capacity.
Chairman Stephen Ng Min Lin said the additional revenue was on the basis of a minimum sale price of RM18 to RM20 per kg.
XingHe, according to Ng, was also actively on a lookout to acquire more prawn breeding farms in the country.
In addition to breeding capacity expansion, the company is exploring to sell the Vannamei domestically via own brand, retail shops, and e-commerce.
"It is one of our plans to expand the business. Once we create and build our own brand, we can command higher margins, as all our seafoods are high quality and fresh since we control the entire chain of production.
"However, we acknowledge that building a new brand will take time. We are ready to take on the journey through trial and error to identify what suits most to our targeted audience," Ng told the New Straits Times recently.
Besides higher margins, XingHe expected that the ready-to-eat trend was coming, he added.
The company has also set plans to venture into frozen tuna and other species of fishes.
"People are looking for packaged cooked food which does not require further processing. We want to integrate our brand into the ready-to-eat market in the future," he said.
XingHe acquired Tawau-based Pegagau Aquaculture Sdn Bhd’s (PASB) assets in December this year, a company that has been in the business of breeding of Vannamei for more than 10 years.
PASB, which was founded by Lim Ah Cham and his son Chun Chek in September 2000, is said to be one of the top three prawn-farming companies in Malaysia.
"Currently, our capacity stands at 2,000 tonnes a year. Hundred per cent of our products are now sold in unpeeled and frozen packs to our overseas customers in South Korea, Vietnam, and China.
"We are exploring ways to create our own brand and sell locally. This would give us a better margin compared to overseas customers, besides the logistics advantages," he said.
On its overall plans and outlook for 2020, Ng said with the completion of the PASB acquisition, XingHe had officially become an aquaculture-based food producer.
"We strongly believe food is a necessity and a recession-proof business. This venture will enhance the value of XingHe in the long term," he said.
Ng said Henan Xinghe Oil & Fat Co Ltd, the company's edible oil business, had been affected by China’s campaign against environmental pollution in the country’s smog-prone northern region.
The prawn breeding business will reduce the company’s reliance on its existing business and strengthen its financial performance by having a new Malaysian-based business, he added.
According to the company circular to shareholders in July this year, XingHe noted that the marine shrimp aquaculture market in Malaysia was likely to experience cyclical growth in the medium to long term.