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Kawan Food buys land in Selangor to build second manufacturing facility

Kawan Food buys land in Selangor to build second manufacturing facility

21 Apr 2022

Convenience food manufacturer Kawan Food Bhd is buying five parcels of land measuring 7.08 acres in Shah Alam, Selangor for a total of RM50.46 million, as part of its expansion plans.

Kawan Food said it intends to build a second manufacturing facility for its operations on the proposed site. It plans to expand its cold room facility to include a warehouse and cold chain distribution for in-house and external products, equipped with new technology such as robotic automated warehouse to cater for frozen, chilled and ambient food products.

“This would enable Kawan Food to explore new ideas and growing product diversity for new markets. Also, with the strategic location in Shah Alam, there is potential reduction in logistic cost for deliveries in local market,” it said in a bourse filing on Thursday (April 21).

Kawan Food’s wholly-owned subsidiary Kawan Food Manufacturing Sdn Bhd (KFMSB) has entered into a sale and purchase agreement with RGP Warehouse Solutions Sdn Bhd to buy three parcels of land totalling 4.07 acres for RM28.94 million or RM163.199 per sq ft. KFMSB is also in the process of acquiring another two parcels of land totalling 3.01 acres from Perbadanan Kemajuan Negeri Selangor (PKNS) for RM21.52 million.

The group said it will finance the land acquisition through internal funds and/or external borrowings.

“The acquisition is in line with Kawan Food’s corporate strategy of expanding and growing its operations, and diversification, as well as exploring and developing new segments of the industry, manufacturing a variety of products including plant-based products, etc, in chilled ambience, aside from frozen food. This business strategy will provide an opportunity for Kawan Food to create greater economic value and increase the earnings potential of the group,” it added.

Barring any unforeseen circumstances, the land acquisition is expected to be completed by the last quarter of 2022. The acquisition is not expected to have any material effect on the group’s gearing for the financial year ending Dec 31, 2022.

Kawan Food shares closed up 3 sen or 1.83% at RM1.67 on Thursday, bringing it a market capitalisation of RM600.4 million.

Source: The Edge Markets

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