XingHe to build second plant in China

by **Cals** Wed 24 Sep 2014, 02:31

Business & Markets 2014

Written by Liew Jia Teng of theedgemalaysia.com

Tuesday, 23 September 2014 09:33

HENAN (China): China-based Bursa Malaysia-listed XingHe Holdings Bhd plans to build its second plant in China to produce peanut protein powder in the first half of next year.

Estimated to cost 400 million yuan (RM210 million), the proposed plant is part of the peanut oil producer’s plans to venture into the nutritional food industry. The investments include land acquisition, buying machinery and marketing expenses.

XingHe managing director and substantial shareholder Ma Guo Liang expects the expansion project to kick off in the first half of 2015, after it identified a joint-venture (JV) partner.

“We are looking for a potential JV partner in China who is also producing edible oil. Ideally, we hope to form a 60:40 JV, with us in the driver’s seat,” he told Malaysian reporters during a familiarisation trip to the group’s existing plant here last week.

“We hope to commence operation within one and a half years (2017),” he said.

He added that the proposed plant will be built either in Neihuang county of Anyang city, or in Zhengzhou city, the capital of Henan province.

Construction of the proposed plant will be divided into two phases, with Phase 1 to involve an investment of 130 million yuan and 270 million yuan for Phase 2.

Once fully operational, Ma said the business segment of peanut protein powder is expected to contribute 60% of the group’s net profit in three years from now.

Ma said XingHe plans to make greater investment of 1 billion yuan to further develop the peanut protein powder, which will be upgraded from food to pharmaceutical grade later.

XingHe, one of the top six edible oil companies in China, made its debut on the ACE Market of Bursa in late April 2014 after completing a reverse takeover of Key West Global Telecommunications Bhd.

Besides producing peanut oil, XingHe also manufactures peanut protein cake, a by-product used in the production of animal feed.

XingHe’s existing production facility, which spanned about 111,500 sq m in Neihuang, has an annual processing capacity of some 240,000 tonnes of peanuts.

Currently, peanut oil and peanut protein cake contribute equally to the group’s production capacity.

In the long term, Ma said XingHe also plans to set up a palm oil refinery plant in Malaysia, with an annual capacity of 100,000 tonnes to 150,000 tonnes as it sees potential in the country to become a regional hub for its business expansion in Southeast Asia.

“With [its] huge palm oil resources, we see Malaysia as a good platform to produce blended oil. In fact, this was one of the main reasons we went public in Kuala Lumpur this year,” said Ma.

Meanwhile, the group will introduce its edible vegetable oil in Malaysia under the brand name of ‘XingHe’, as it hopes to penetrate the Malaysian consumer market. This will be followed by Singapore and Indonesia.

XingHe is positioned as a premium brand in China, as peanut oil is a popular fine grade edible vegetable oil in China because of its nutritional benefits and nutty aromatic flavour.

Currently, the group’s cooking oil products, including pure peanut oil, blended oil, as well as its repackaged soybean oil and corn oil, are distributed in eight provinces and cities in China, namely Henan, Shandong, Hebei, Beijing, Guangdong, Guangxi, Fujian and Jiangsu.

This article first appeared in The Edge Financial Daily, on September 23, 2014.