KUALA LUMPUR: Aquaculture-based food producer MAG Holdings Bhd has secured its shareholders’ approval to acquire a 100 per cent equity interest in North Cube Sdn Bhd (NCUBE) for RM200 million.
The group, which aspires to be among Malaysia’s top three aquaculture producers, said NCUBE's prawn aquaculture farming comprised 133 cultivation ponds, situated in Tawau, Sabah.
Following the acquisition, the breeding capacity of the enlarged MAG Group would increase to 4,000 tonnes per year from the current 2,000 tonnes per year.
“The proposed acquisition also comes with a profit guarantee of not less than RM18 million in aggregate on a consolidated basis for the 18-month financial period ending June 30, 2022,“ MAG said in a statement today.
Its chairman, Ng Min Lin, said as MAG and NCUBE are involved in the aquaculture business, the earnings accretive from proposed acquisition would enable both companies to leverage on their combined strengths and accelerate MAG’s expansion plan in Malaysia.
“Having an own processing plant is an essential vertical integration in the supply chain of prawn aquaculture business that provides the enlarged MAG group with operational and cost advantages.
“We are also exploring to produce more value-added products with better margins such as ‘peeled and deveined’ and ‘cooked prawns’ to a wider geographical market globally,” he said, adding that the acquisition was the second one undertaken by the group.
Its first acquisition was Wakuba Farm, completed in December 2019, which helped to turn around MAG last year.
After suffering a loss after tax of RM28.6 million in its financial year ended Dec 31, 2019 (FY2019), the group recorded a net profit of RM8.4 million, contributed mainly by Wakuba Farm. Revenue stood at RM50.6 million in FY2020 compared with RM1.6 million a year ago.
Malaysia’s marine shrimp aquaculture accounted for 24.8 per cent of Malaysia’s aquaculture production volume and 41.3 per cent of its production value in 2019.
Going forward, the local marine shrimp production aquaculture market is projected to expand at a compound annual growth rate of 11.9 per cent, from RM1.13 billion in 2020 to RM1.99 billion in 2025, the company said. - Bernama
Source: The Sun Daily
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