August 29, 2008

 

 

QL RESOURCES Bhd, the largest surimi producer in Asia and the top fishmeal maker in Malaysia announced it would spend RM170 million (US$50.12 million) in the current fiscal year and next to buy out rivals and expand in the region.

 

Managing director Chia Song Kun said more funds would be spent on acquisitions, new factories and increasing production capacity.

 

Besides surimi and fishmeal production, the company is also involved in the production of poultry meat, eggs and oil palm.

 

Chia said its expansion into Vietnam for livestock farming and new surimi plants in Indonesia will need investment. The company would also expand its investments in oil palm plantations in Indonesia.

 

Chia commented at a shareholder meeting that although Malaysia's poultry and egg market is saturated, the company could still grow by buying other poultry and egg farms. Setting up new facilities would be squeezing the market, he said.

 

Neighbouring countries such as Vietnam and Indonesia, with their growing populations, would hold great growth potential as well, he added.

 

Chia said he does not anticipate problems funding the expansion as the company generates about RM150 million (US$44.20 million) free cash flow every year.

 

On top of that, QL undertook a share placement in 2006 to cut its gearing level to just 20 percent against its shareholder fund, mostly in long-term debt. The low gearing will allow the company to borrow from banks when needed, he said.

 

Chia also assured shareholders that its investments would not affect its dividend policy of paying out between 25 per cent and 30 percent as the quantum should be stable with its steady earnings growth, he said.

 

Net profit in the first quarter to June 30 grew 40 percent to RM21.5 million as revenue rose 16 percent to RM364.5 million.

 

QL has had a consistent record of 26 percent average earnings growth in the past eight years since its listing in 2000.