Malaysian poultry producer Leong Hup rises 8.2% on debut, signals firm demand

MAY 16, 2019 - 12:45 PM

[KUALA LUMPUR] Shares of poultry producer Leong Hup International rose as much as 8.2 per cent on its market debut on Thursday, signalling firm appetite for Malaysia's largest initial public offering (IPO) in almost two years.

The shares hit a high of RM1.19 in the first few minutes of trade after the IPO was priced at RM1.10 per share, giving Leong Hup a market capitalisation of RM4.02 billion (S$1.32 billion).

They pared some gains to trade at RM1.12 at the midday break. The benchmark exchange was down 0.15 per cent.

Shares in smaller rivals LTKM Bhd and TPC Plus Bhd were down 4.6 per cent and 5.6 per cent, respectively, while DBE Gurney Resources Bhd was unchanged.

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Leong Hup raised RM1.03 billion from the IPO and, if the overallotment option is fully exercised, it would raise a total of RM1.2 billion.

The initial target was to raise US$600 million from the IPO but the offer size was cut last month as investor demand softened in a choppy market, sources have said.

The IPO is Malaysia's first since Lotte Chemical Titan's issue in July 2017.

Leong Hup is majority-owned by the founding Lau family and also backed by private-equity firm Affinity Equity Partners, both of whom remain as shareholders.

It is one of the largest fully integrated producers of poultry, eggs and livestock feed in Southeast Asia, and also operates in Indonesia, the Philippines, Singapore and Vietnam.

Leong Hup is exploring opportunities to set up operations in Cambodia, where it already exports feed and chicks to from its Vietnamese operation.

CFO Chew Eng Loke said sales in Cambodia have been promising and a warehouse is under construction to boost growth.

"Once the sales volume of day-old chicks reach adequate scale, we will then establish breeder farms to supply the market instead of exporting from Vietnam," he told Reuters.

Leong Hup's IPO secured 10 cornerstone investors, including domestic pension fund Employees Provident Fund, insurer AIA and European commodities house Louis Dreyfus Company.

Leong Hup had a profit of RM60.6 million for the quarter ended March 31, a 15 per cent rise from a year earlier. Revenue rose 11.9 per cent to RM1.51 billion.