[ LAYHONG Berhad ] - What Is The Director Doing ??? - J4 Investment Capital
Lay Hong Berhad is one of the leading fully-integrated livestock farming players in Malaysia . It’s core business activities involve the production of chicken eggs, liquid egg, chilled and frozen dressed chicken, chicken parts and processed related chicken products and retail stores. The company’s upstream products will then be processed into a ready-to-eat product ( frozen fried chicken , functional eggs and nuggets ) which is their main downstream products where they can enjoy a better profitability and less volatile selling prices. The company has also created their own brand known as NutriPLus and Wise Choice . The businesses are carried out primarily in Peninsular Malaysia state of Selangor, Perak, Melaka and Sabah in East Malaysia whereas the retail operation is concentrated only in the state of Sabah. The company has a few existing poultry processing facilities consisting of a slaughterhouse, cutting room and further processing plant in Selangor .
For the layer sector - One of the farm was built in the vicinity where the existing 11 modern closed house layers farms are located in Selangor and Melaka. With these additions, the aggregated production capacity of eggs per day for the Group have increased from 2.2 million production per day to 3.0 million. The total capacity for the production is up to 3 million eggs per day . Grade ‘A’ egg prices are estimated to be priced at RM0.38/each on average for Feb 2018 against RM0.35/each in Jun 2017.
For the broiler sector - There is a total of 10 existing broiler farm which is located in Selangor and Sabah .Two new environmental controlled broiler farms equipped with the latest rearing technology have been completed during the said period. One in Peninsular Malaysia and the other is in Sabah. Total additional capacity generated will be 600,000 broilers per 60 days cycle. One more new farm located in the existing vicinity of Tanjong Karang, Kuala Selangor with a capacity of further 450,000 broilers per cycle is under construction and is planned to be fully completed during the current financial year ending 31st March, 2019. With these new capacities coming on stream, the Group will be able to produce up to 4.00 million broilers per 60 days cycle. The planned increase is to meet the rising demand from existing chicken processing operation as well as from the Joint Venture Company with NH Foods Ltd for HALAL chicken meat as its raw material. The total capacity for the production of broilers is 4 million per day .
For the Pasteurised Liquid Egg Sector - The Group currently operates one pasteurized liquid egg plant. This plant is located in Meru, Klang and has a capacity to pasteurise up to 400 metric tonnes of customized liquid egg products per month such as egg white, yolk, whole egg, liquid egg with salt or sugar or other ingredients. Currently, approximately twenty (20) percent of the total fresh table eggs produced by the Group are pasteurised into liquid egg and sold to local industrial users and export market such as Singapore, Brunei, Vietnam and South Korea . To meet rising demand especially from the Southern Region and Singapore, the Company through its fully owned subsidiary company Lay Hong Liquid Egg Sdn Bhd has acquired a newly built factory in Iskander Halal Park, Pasir Gudang, Johor, to set up its second egg processing facility. It is expected it to be fully commissioned in the forthcoming financial year ending 31st March, 2019.
For the retail supermaket sector - The Group currently operates seventeen 17 retail outlets. However , they are still having loss in this sector because of the minimum wage and previous 6% GST system . The write off of the sunk renovation cost of the non performing outlet closed during the year also contributed to the pre-tax loss .
Joint Venture with NH Foods Ltd , Japan - A joint venture company called NHF Manufacturing
(Malaysia) Sdn. Bhd. has been incorporated in May 2016 and has since commenced operation. Lay Hong Bhd owned 49% or 14.70 million ordinary shares and is represented by two nominee directors. The other 51% is owned by the above. Construction of the manufacturing facility currently located in Selangor Halal Hub, Pulau Indah is in progress and is targeted to be fully operationally by the 4th quarter of the calendar year 2018.
Causes that make the price plunge :
1) There is a news where a flu virus currently spreading in Sabah Region in Tuaran . However , the Sabah Veterinary Services Department has announced it and state that it is under controlled .
2) Director selling warrants hard . Mr . Yap Hoong Chai has acquired 33 millions of warrants at a price of RM 0.50 , which is worth RM 16.5 mil in Jun . However , he then sold 16 millions of it at the price of RM 0.4 for RM 6.4 mil in late July . The transaction based on the two months has made him a loss of RM 8.5 mil .
But why did he keep on throwing his shares for no reason ? Will the price continue to drop just because he still has tons of shares to sell ? Or you should buy on the fundamental and the strong growth of this company ?
Disclaimer : Information above is for sharing and education purposes , not a buy and sell advice , please refer to ur advisory for any buy or sell call , buy and sell at your own risk .
Happy investing !
Feel free to visit our FB Page , gives us a LIKE and share it out so that we can share more things to you !!!
J4 Investment Capital.