Rhone Ma Holdings (Rhone Ma) has announced its appointment by the East Coast Economic Region Development Council to manage and operate the 275 hectares Jemaluang Dairy Valley (JDV) in Mersing, Johor, with a joint venture formed between A2 Fresh Holdings SB (A2FSB), its 49% owned subsidiary and Kulim.
A2FSB holds a 35% stake in JDV, while Kulim owns 35%, as part of the Johor Corp group, and the remaining 30% stake is held by Kulim in trust for the Johor government.
“The construction of this project is expected to be completed by July 2024,” said Public Investment Bank (PIB) in the recent PublicInvest Research Company Update Report.
PIB views this joint venture positively as it enables Rhone Ma to expand its dairy farming business in the southern region of Peninsular Malaysia, while leveraging on the financial resources of Kulim. However, PIB is not expecting this joint venture to contribute meaningfully to the group until financial year 2026/2027 future. PIB maintains their Outperform call on Rhone Ma, with an unchanged trading price RM0.88.
The group currently does not process milk that is being produced at its Batang Kali facility but is sold to wholesalers due to the absence of a milk processing plant. With the joint venture, Rhone Ma is able to develop a fully integrated facility with both upstream and downstream operations in dairy cattle farming business.
The facility also includes the development and operation of fodder. This would not only lower its carbon footprints but also lower the value chain cost per litre of fresh milk when it is able to supply its cattle with locally grown feed meal.
Rhone Ma through its 49%-owned subsidiary, A2FSB, will manage the daily operations of JDV by role of expertise in providing technical, know-how and guidance on technological requirements of both upstream and downstream business of the dairy project.
They will also develop and manage the training and other relevant activities for the satellite farmers program and participate in the community development program in the overall project value chain. The JDV project is expected to boost national production by 10%, producing 5.1 million litres of fresh milk annually.
