XingHe to set up first plant out of China in Selangor

KUALA LUMPUR: China-based edible oils manufacturer XingHe Holdings Bhd expects an increase of 15-20% in revenue in its collaboration with Arab Supplier Fabrication and Retail Sdn Bhd (Asfar) to tap into the Middle East, Africa, Europe and Southeast Asia markets.
To facilitate the expansion plan, the 50:50 joint venture will set up a manufacturing plant in a free trade zone in Klang to produce several types of oil and fats such as peanut oil, soya bean oil, palm oil and blended oil, which will be imported to the Middle East and African countries.
Speaking at a press conference after the signing ceremony here yesterday, XingHe executive director Stephen Ng Min Lin said the group will fork out an initial investment of RM10 million for the construction of the manufacturing facility.
"Construction works will start as soon as June or July, and will take six to nine months to complete, so the financial effects will (really come in) from 2016," he added.
The joint venture, Ng said could bring an additional RM100 million in revenue for XingHe in the first year of operation.
At a capacity of 90-100%, the manufacturing plant is expected to be able to produce 10,000 metric tonnes of oils per month.
Under the agreement, the total investment for the joint venture could go as high as RM90 million over the next five years.
This will also mark XingHe's first manufacturing plant outside China. XingHe was listed on the local bourse in April last year after a reverse take over of Key West Global Telecommunications Bhd.
According to Ng, XingHe is now the sixth largest edible oils manufacturer in China.
Asfar, which is involved in the manufacturing and exporting of palm-related products, is 30%-owned by Jordanian Hani Waleed A.Asfar, who is also the CEO of Asfar.
Ng expects higher margins of 15-20% for the Middle East and Africa regions compared with 10-11% for China due to higher selling prices as well as special tax exemptions extended by the Jordanian government.
He hopes that the venture into new markets will enable it to secure a bigger share of the global vegetable oil market, which is expected to be worth RM91.4 billion by 2017.
XingHe's net profit stood at RM36.1 million for the financial year ended Dec 31, 2014 on the back of RM981.62 million revenue.
Trading in XingHe shares were suspended yesterday pending the material announcement. At the close on Monday, the counter was up 0.5 sen to 12 sen.