With over 20 years of experience and expertise in feed production, Thai Union Feedmill PCL or TFM has become a leader in the production and distribution of aquaculture and commercial animal feeds in Thailand, offering quality and widely known branded products. It has accumulated know-how leading to new innovations in production processes.
Following its listing on the Stock Exchange of Thailand (SET) under the symbol “TFM†on October 29, the company is prepared for continual sustainable growth and is determined to take the leadership role in the aquaculture and commercial animal feed business sector.
Bunluesak Sorajjakit, Chief Executive Officer is confident that TFM’s IPO shares will attract widespread interest among investors. Between 2021 and 2023, 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. TFM expects to spend the proceeds of THB 1,177.4 million (USD40 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 tonnes per year, requiring an investment of no more than THB 250 million (USD 7.6 million) by 2023;
- Repay loans of between THB 250-350 million (USD 7.6-10.7 million) by March 2022 to reduce the debt-to-equity (D/E) ratio to less than 1 time (x), after the IPO; and
- Use the remainder as working capital.
Moreover, as a policy, TFM intends to pay dividends twice a year, amounting to no less than 50% of the net profit per the consolidated financial statements after reduction of all categories of reserves according to company rules and legal requirements.
The TFM CEO adds that TFM is determined to expand its operations to overseas markets with appropriate business models deemed beneficial. These are:
- Technical support to the Indian partner. 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 formulations to produce and sell shrimp feed in India;
- Overseas joint ventures with partners. TFM joined strategic partners to form PT Thai Union Karisma Lestari Co., Ltd. (TUKL), a subsidiary to produce and distribute aquafeeds 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% 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 aquafeed. AMG holds 49% of shares in the new company while TFM holds 51% as of June 30, 2021. AMG-TFM produces 7,000 tonnes of fish feed per year and plans to increase capacity to 15,000 tonnes per year within 2021. The joint venture has started commercial operations and has recognised revenues with net profit since the 2ndquarter of 2021;
- Direct exports to various countries, including Malaysia, Maldives, Myanmar, Pakistan and Sri Lanka.
On domestic market expansion, TFM plans to develop new business and continues efforts in maintaining its competitiveness as an industry leader. The company is the first in Thailand to produce and distribute pelleted feeds for sea bass to replace the use of trash fish and is also a leading producer and distributor of feeds for large seabass. Recently, the company has also launched products under its “fighting†(high protein) feed 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, the company has set its sights on promoting feeds for other fish species and has R&D on feeds for other aquatic species, such as crab and gourami. TFM also envisions a growth opportunity in the commercial animal feed sector that should help support food security in Asia.
Pichet Sithi-Amnuay, Managing Director of Bualuang Securities, the financial advisor and underwriter of the Company’s IPO, says that TFM, with a highly qualified staff, a strong capital base and access to innovations, has manage to improve its competitiveness and even raise the industry standards. TFM can produce products of high quality with consistency and high performance, contributing to the healthy growth of aquatic species. “TFM can also produce a range of products encompassing the entire life cycle needs of aquaculture at competitive prices. This explains how TFM’s products and brands have earned customers’ trust in terms of quality and satisfied their diverse demands over a long period of time.
“For these reasons, TFM is in a prime position to pursue growth opportunities in both local and overseas markets through expansion in the production of feeds for aquatic and other types of animals. Other channels of overseas expansion include entering into cooperative agreements with local strategic partners or joint ventures to set up production bases, which will contribute to the company’s sustainable growth. So far, TFM has attracted great interest from institutional and retail investors. It is a clear sign of confidence that TFM shares are of strong fundamentals which should gain wide acceptance from investors.†www.thaiunion.com/ www.thaiunionfeedmill.com
