FGV (5222) FGV Holdings Berhad. Company Prospect Updates
Prospect of FGV Holdings Berhad
By Stella Goh
Merger and Acquisition (M&A) activities in Malaysian plantations stood at almost RM1 billion in the first half of the year (1H20). Analysts believe that the plantation sectors will remain active with M&A for the next and half year due to their low valuation coupled with land scarcity and potential land development opportunities other than oil palm. According to the analyst, if the government wants to achieve the goals of 4,400 megawatts (MW) renewable energy by 2025, about 12,000 acres of land is needed to build solar power plants. The Covid-19 pandemic may be the main reason for the weak stock price of small and medium-sized oil palm producers, while the other factors are cost and labor shortage.
Partners with SME to expand into animal feed business
According to the group CEO Datuk Haris Fadzilah Hassan, the animal nutrition and protein under integrated farming sector have been identified as an important growing revenue stream for the group. FGV will cooperate with more Small and Medium Enterprises (SMEs) to expand its animal feed and animal nutrition business. This partnership would enable the company to penetrate the nationwide market more effectively as it seeks to achieve its target of 50,000 tonnes production for this year.
The company’s subsidiary FGV Integrated Holdings Sdn Bhd has signed a distributor partnership agreement with My Agro Hub Resources (My Agro Hub) which is expected to sell 30 tonnes of formulated animal feed every month, for dairy cattle, beef cattle and goat farmers in Negeri Sembilan and Melaka. With the abundance of raw materials provided by their palm oil plantations and mills, they can produce up to 400,000 tonnes of highly nutritious animal feed every year. Palm kernel being one of the raw materials of animal feed is very important to ensure the feeds produced are of high standards to ensure the quality and health of livestock. As the designated distributor of FGV animal feed products, My Agro Hub will also be one of the fit farms to test FGV’s upcoming formulated goat feed. Earlier this year, FGV signed agreements with six distributors located in Pahang, Kelantan, Selangor and Kedah.
FGV grows logistics sector revenue with new trucks and tankers
FGV has purchased additional transportation in order to strengthen its logistics business, and plans to purchase another 15 new trucks this year. The company’s logistics business is responsible for the entire company’s supply chain, with a fleet of nearly 500 trucks (tanker, cargo, courier) and 14 nationwide hubs, inclusive of five main depots and nine sub-depots. The new trailer can carry 40 tonnes of products. In addition, the business has purchased 15 dump trucks capable of carrying between 18 and 20 metric tonnes of goods. At the same time, in response to the government's B20 mandatory biodiesel program, the company has also purchased 5 new PME trucks, increasing the fleet to 9, and currently carrying 350 tonnes of goods.
FGV clonal research enroute to fulfill 30% of national banana consumption
According to FGV group CEO Datuk Haris Fadzilah Hassan, FGV ventures into banana clonal research shows results as it is set to fulfill an estimated 30% of national consumption demand for the fruit by 2021.
The company is now targeting one million banana clones in 2021, an increase of 100% from the current production to cater to the niche market demand for fresh banana and banana-based food industry. This is in line with FGV’s strategic move to expand its Integrated Farming initiatives and at the same time increase local banana production with a target of 50 per cent market share or equivalent to 1.7 million seedlings by 2022 which will ultimately improve banana farmers’ livelihoods in Malaysia. With experienced and dedicated researchers in tissue culture production, technical advisory and nursery operation, FGV has the expertise to support the banana agropreneurs and smallholders with superior banana clonal seedlings, banana contract cloning and contract farming.
FGV’s banana clonal seedlings, which include several varieties such as tanduk, lang, nipah, nangka, rastali, mas and lemak manis are available for bulk purchases in five nurseries and outlets in Bandar Enstek (Negeri Sembilan), Trolak (Perak), Jerantut (Pahang), Bukit Tongkat (Johor), and Lahad Datu (Sabah). FGV is now developing clonal planting material for other high-value crops such as pineapple, bamboo, vanilla and aquatic plants to fulfil high market demands.
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