Aquaculture group MAG Holdings Bhd unveils plan to spend RM100 million (US$23.8 million) this year to expand its prawn farm business and to double production capacity to 8,000 tonnes per year, as it seeks to cater to rising overseas demand particularly from South Korea.
MAG Group Executive Chairman Stephen Ng said that demand for vannamei or king prawn is so strong that MAG does not have extra produce for its prospective customers.
He said, “In February, we will commence operations at our 3rd site, which will increase our production to 5,500 tonnes per year. It was a RM15 million (US$3.56 million) investment. Then, we will expand with our 4th site, which is on a 125-acre land that will house 96 ponds and a new processing plant. The facilities will be able to process 6,000 tonnes of prawns a year, increasing our processing capacity to up to 12,000 tonnes per year. The total investment is about RM120 million (US$28.5 million).”
Aquaculture companies that do the processing themselves usually ensure that their processing plants have some reserve capacity in case production exceeds their projections. With the additional capacity in Tawau, Sabah, MAG hopes to open more accounts with new customers and to diversify its customer base.
Currently, up to 90% of MAG’ produce is exported, with the bulk of it to South Korea as the company has a strong relationship with the largest prawn supplier brand in that country, which has been sourcing its prawns from MAG.
MAG was previously known as XingHe Holdings Bhd, which used to be involved in the production, blending and marketing of peanut oil and other edible vegetable oils, as well as a raw peanut business in China. In December 2019, the group ventured into prawn farming after it acquired the assets of Pegagau Aquaculture Sdn Bhd, or the Wakuba farm, for RM100 million (US$23.8 million). The group then acquired North Cube Sdn Bhd in July 2021, an aquaculture farming group that owned 133 cultivation ponds and a prawn processing plant in nearby vicinity to Wakaku.
The venture into aquaculture has proven to be profitable for MAG. In the 18 months ended 30 June 2021, MAG net profit amounted to RM9.22 million (US$2.19 million), a positive achievement despite the pandemic restrictions. When it previously operated under XingHe, it posted a net loss of RM101.4 million (US$24.11 million) for the financial year ended 31 December 2019. Within 2 years, MAG has become one of the largest prawn aquaculture farmers in Malaysia competing alongside giants like the CP Group.
Malaysia currently produces 45,000 tonnes of vannamei or better known as king prawns or white leg shrimps every year, which is small number compared to its neighbours like Vietnam (465,000), Thailand (285,000), Indonesia (285,000) and India (640,000).
