QL Resources plans RM400 million capex

QL RESOURCES Bhd has set aside RM400 million over the next two years to expand its poultry, fishing and oil palm planting businesses, managing director Chia Song Kun said.

It will use the money to set up poultry farms, build more deepsea boats, plant more oil palm trees and build a mill in Indonesia.

"We are allocating RM200 million for the current year ending March 2011 and a further RM200 million for 2012 for our business in poultry farming, planting of oil palms and deepsea fishing," he told reporters after the company's annual general meeting in Petaling Jaya, Selangor, yesterday.

This year, it has revived long-awaited plans to set up poultry farms in Vietnam and Indonesia.

To date, the group has started construction of a layer and livestock feed farm in Tay Ninh, Vietnam. QL's US$10 million (RM31 million) investment targets production of 500,000 eggs a day in the financial year ending March 2012. Over in Indonesia, QL is pumping US$20 million (RM62 million) into a breeder and layer farm in the Cianjur district. Its target for the current year is 12 million "day-old chicks". In the longer term, it expects egg production to touch one million a day.

Traditionally, half of QL's profit comes from integrated livestock farming. It is currently the second largest distributor of livestock feed in the country, producing seven million broilers and 16 million day-old chicks a year.

A couple of days ago, QL told the stock exchange it bought a 23 per cent stake in rival Lay Hong Bhd. Coincidentally, London Biscuits Bhd sold its entire 16 per cent stake in Lay Hong. QL's investment in Lay Hong's business will enable it to leverage on economies of scale and import poultry feed at cheaper pricing.

Lay Hong can produce 1.5 million eggs a day and five million broilers a year. Its nuggets and burgers are sold under the brand names of Nutriplus and Wise Choice.

Without factoring in Lay Hong's business, QL has 20 per cent share of the egg market in the country. It can produce 2.5 million eggs a day.

QL, which makes 25,000 tonnes of surimi a year, is also Asia's biggest surimi producer. It also produces 30,000 tonnes of marine-based products and 25,000 tonnes of fishmeal a year.

QL's oil palm plantation landbank totals 21,200ha, out of which 20,000ha are in Indonesia. Chia said the group is investing about RM25 million to put up biogas and biomass plants at its Sabah palm oil mill to turn waste into green energy.

To date, QL has planted 7,500ha on its east Kalimantan oil palm estates. It will spend US$15 million (RM47 million) to instal a mill there.

Despite the high capital expenditure allocated for the next two years, Chia has reassured shareholders that the group can, and will continue to, pay out 25-30 per cent of group profits as dividends.

2 Responses to QL Resources plans RM400 million capex

  1. Hey RS,

    If you follow business news on a regular basis, you'll know both reported numbers (RM280 million as at July 2009 and RM400 million as at Aug 2010) are genuine as they were obtained from the management.

    Depending on when reporters ask the management, the figures will differ as the management adjust their planned capital expenditure according to the investment climate at that time.

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