Heng Huat to grow on China’s briquette market

This is written by my colleague Muhammad Ahmad Hamdan.

KUALA LUMPUR: Heng Huat Resources Group Bhd, which debuted on the ACE Market of Bursa Malaysia yesterday, is banking on the robust briquette demand from China to help it achieve a 10 per cent increase in revenue by year-end.

Co-founder and managing director H'ng Choon Seng said Heng Huat's oil palm and coconut biomass, which is processed into briquette, is seeing growing shipments into the energy hungry republic.

China’s growth potential for alternative energy sources is apparent in areas where environmental issues are increasingly coming to the fore.

“The higher environmental awareness globally has led to increasing government laws to curb air pollution and usage of depleting fossil fuels, such as the recent ban on new coal-fired plants in several cities throughout China.

“These developments are likely to spur greater demand for cleaner and renewable energy sources such as palm biomass briquette,” H'ng told a press conference after the company’s listing ceremony, here, yesterday.

Heng Huat saw revenue rising to RM21.3 million in the first quarter ended March 2014, from RM16.1 million a year ago on significant export sales to China, which contributed 50 per cent of the revenue.

H'ng said the company, which has 10 intermediate companies in China, will set up a subsidiary in southern China to support its operations there.

Heng Huat raised RM20.93 million from the listing exercise, of which RM4 million would be used for capital expenditure, RM4.55 million for working capital and the remaining RM9.38 million and RM3 million for the repayment of bank borrowings and listing expenses, respectively.

Out of the RM4 million capital expenditure allocation, RM3.20 million will be for factory expansion and upgrade, situated at the mainland of Penang.

The company operates two coconut fibre production lines, 20 oil palm empty fruit bunches fibre production lines, two briquette production lines and three coconut fibre sheet production lines.

Yesterday, Heng Huat opened at 61 sen, a premium of 16 sen above its offer price of 45 sen.