PETALING JAYA: Mag Holdings Bhd, which is venturing into the ready-to-eat (RTE) and ready-to-cook (RTC) shrimp segment, is expected to benefit from the growing demand for seafood from China.
Hong Leong Investment Bank (HLIB) Research said half of the additional annual processing capacity of MAG’s second processing plant would be dedicated to producing shrimp products.
This venture is anticipated to benefit from the burgeoning demand for RTE and RTC products from South Korean and Chinese customers.
MAG would command a higher profit margin and also provide advantages to its food and beverage customers by reducing costs, maintaining product stability and ensuring food safety, the research house said.
Additionally, HLIB Research noted that with 30% of MAG’s sales originating from China, the company is in a favourable position to capitalise on the increasing demand for seafood in the market.
China’s seafood consumption is said to be increasing, with the per capita consumption showing a consistent compounded annual growth rate of 2.5% from 2005 to 2020.This is driven by factors including population growth, rising income level, urbanisation and changes in lifestyle, HLIB Research said.
On another note, the group’s fourth farm, 99 cultivation ponds and a processing plant will help to spur breeding and processing capacity.
“While the processing plant is still under construction, it is scheduled to commence operations by August,” the research house said.
It was noted that 80% of the breeding capacity has already been reserved by China’s largest hotpot restaurant chain.