KUALA LUMPUR: Xinghe Holdings Bhd, which currently relies on its edible vegetable oil business in China, is transforming into an aquaculture-based food producer following the completion of its acquisition of a prawn farm in Tawau, Sabah, and related facilities and assets today.
The ACE Market-listed company said its wholly-owned subsidiary, XW Aquaculture Sdn Bhd had completed the RM100 million deal with the vendor, Pegagau Aquaculture Sdn Bhd.
“We are very glad that the two acquisitions are finally completed, almost one year since we announced the plan. Today’s completion marks the first business venture outside of China and we are excited about the plans going forward,” Xinghe chairman Ng Min Lin said in a statement today.
“In the future, we might be looking into frozen seafood retailing business, which hardly can be seen here and can give us good margins,” he added.
The sale and purchase agreements completed today involved a piece of 97.9-hectare land in Tawau for RM12.5 million, and all ponds, other land improvements, buildings, plant and machinery equipment, motor vehicles, livestock and consumables for RM87.5 million.
The farm assets, Ng said, could breed 2,000 tonnes of whiteleg shrimps or king prawns every year.
The seawater prawns are mainly exported in unpeeled and frozen packs to distributors in South Korea, Vietnam and China.
Based on the United Nations Commodity Trade Statistics, South Korea, Vietnam and China were Malaysia’s top export destinations for shrimp products in 2017.
Ng said Xinghe’s current business as edible oil producer had been affected by China’s campaign against environmental pollution in the smog-prone region of northern China.
“This new venture will reduce the company’s reliance on its existing business and strengthen its financial performance by having a new Malaysia-based business.
“This earnings-accretive acquisition will enhance the value of Xinghe in the long term,” he added.