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Thai Union Feedmill listed on Thai stock exchange, aims to lead aquafeed sector

Tuesday, November 2, 2021

Thai Union Feedmill PCL. (TFM) is confident of positive investor response, following the company’s listing on the Stock Exchange of Thailand. Determined to be the leader in the aquaculture and commercial animal feed business, TFM aims to grow in overseas markets through cooperative agreements, joint ventures with trading partners, and direct exports to support food security for Asia’s future.

Bunluesak Sorajjakit, CEO, TFM, said that the company began the first day of share trading on the SET in the agribusiness sector under the brand name “TFM”. With over 20 years of experience and expertise in the industry and accumulated know-how that has led to innovations in production processes, the company has become a leader in the production and distribution of aquaculture and commercial animal feeds in Thailand, offering quality and widely-known branded products. As such, Sorajjakit is confident that TFM’s IPO shares will attract widespread interest among investors.

Following the company’s listing on the SET, TFM is prepared for continual sustainable growth and determined to take the leadership role in the aquaculture and commercial animal feed business sector. Between 2021 and 2023, it expects to spend the proceeds of TBH1,177.4 million ($35 million) from the sale of shares in the following activities:

  • Expand production and distribution of aquaculture feeds through Indonesia-based subsidiary TUKL by adding two lines of production, which will increase capacity by 36,000 tons per year, requiring an investment of no more than TBH250 million ($7.5 million) by 2023.
  • Repay loans of between TBH250-350 ($7.5-10 million) million by March 2022 to reduce the debt-to-equity (D/E) ratio to less than 1 time (x), after the IPO.
  • Use the remainder as working capital.

Asian expansions

TFM CEO added that the company is determined to expand its operations to overseas markets with appropriate business models deemed beneficial. These are:

  • An agreement of technical cooperation with Avanti Feeds Limited (AVANTI), India’s major shrimp feed producer, allows it to use TFM’s trade name and feed formulae to produce and sell shrimp feed in India.
  • TFM joined with strategic partners to form PT Thai Union Karisma Lestari Co., Ltd. (TUKL), a subsidiary to produce and distribute aquaculture feeds in Indonesia. The two strategic partners are PT MSK, a major producer of frozen seafood in Indonesia, and AVANTI. TFM, PT MSK, and AVANTI hold 65%, 25%, and 10% of TUKL’s paid-up capital, respectively.
  • TFM formed a joint venture AMG-Thai Union Feedmill (Private) Limited (AMG-TFM) with a strategic partner in Pakistan. The Pakistani partner AMG is the country’s major producer of aquaculture feed. AMG holds 49% of shares in the new company while TFM holds 51% as of June 30, 2021. AMG-TFM produces 7,000 tons of fish feed per year and plans to increase capacity to 15,000 tons per year within 2021. The joint venture has started commercial operations and recognized revenues with net profit since the 2nd quarter of 2021.
  • Direct exports to various foreign countries, including Malaysia, Maldives, Myanmar, Pakistan and Sri Lanka.

As for the prospect of domestic market expansion, TFM plans to develop new business and continue efforts in maintaining its competitiveness as an industry leader. The company is the first in Thailand to produce and distribute feeds in form of pellets for seabass to replace the use of fresh prey, and is also a leading producer and distributor of feeds for giant seabass. Recently, the company has also launched products under its “fighting” brand through a marketing campaign to expand its customer base to more diverse segments as the demand for fish feed is on the rise. Furthermore, TFM has set its sights on promoting feeds for other fish species and has been putting in research and development efforts on feeds for other aquatic species, such as crab and gourami. TFM envisions a growth opportunity in the commercial animal feed sector that should help support food security in Asia.

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