KUALA LUMPUR: Integrated poultry producer Hock Soon Capital Bhd is banking on a stronger ringgit and expanded production capacity to boost margins.
Executive director Alex Ong Keat Hoe said a stronger ringgit reduces imported feed costs, which remain the company’s largest expense component.
“As I understand, the ringgit has been strengthening. As of this morning, it is around RM3.80 against the US dollar. So I believe, with that, we are able to save some cost on the feed,” he told a press conference after its listing on the main market of Bursa Malaysia yesterday.
Ong explained that the company sources its feed ingredients such as corn and soybean meal from overseas markets, including Argentina, Brazil, Ukraine and similar producing nations.
Under the IPO exercise, Hock Soon raised RM60 million from the issuance of 100 million new shares at 60 sen each, alongside an offer for sale of 50 million existing shares via private placement.
Of the total proceeds, RM53.5 million (89.1%) will be utilised to establish the Teluk Intan farm, while RM6.5 million will be used to defray listing expenses.
Ong said the entire development of the Teluk Intan farm will be carried out progressively over a five-year period, with capacity increasing in stages as each coop becomes operational.
“Right after listing, we will begin contracting for the construction of the new closed-house chicken coops at our Teluk Intan site.”
“The land has already obtained KM approval and land clearing works are currently underway. We expect to commence infrastructure development soon,” Ong said.
The company currently produces 1.63 million eggs per day from its existing operations. Upon completion of the Teluk Intan poultry farm, total production capacity is projected to increase to 3.16 million eggs per day.
“We anticipate the first egg production to begin within six months post-listing,” Ong said.
Currently, Hock Soon operates a poultry farm in Bidor, Perak, comprising 28 and 7 closed-house chicken coops for mature hens and pullets respectively, with capacities of 1.92 million mature hens and 0.49 million pullets respectively. The Bidor farm has a current egg production capacity of 1.63 million eggs per day.
Beyond domestic expansion, Hock Soon is also looking to penetrate the Singapore market as part of its diversification strategy.
Ong said the company completed an audit by the Singapore Food Agency (SFA) in July last year and is currently awaiting formal approval to begin exports.
“We have already completed the audit and are hopeful of receiving a response soon. Once approval is granted, we intend to start exporting eggs to Singapore,” he said.
He added that the company is targeting an initial contribution of at least 5% of total revenue from Singapore exports once operations commence.
Singapore is viewed as an attractive market due to its relatively higher selling prices and stronger currency, which could potentially translate into improved margins for the group.
“We do expect margins in Singapore to be better, partly due to currency exchange advantages,” Ong said.
However, he stressed that the company’s immediate priority remains ensuring stable domestic supply, noting that eggs are a staple food with consistent demand in Malaysia.
“Singapore will serve as a diversified revenue stream moving forward, but our main focus is still to support the local market first,” he added.
Based on the enlarged share capital of 500.0 million shares, the total market capitalisation of Hock Soon upon listing would be RM300.0 million.
M &A Securities Sdn Bhd is the adviser, underwriter and placement agent for the IPO exercise.
The Sun Malaysia
