KUALA LUMPUR (Mar 20): Poultry firm CAB Cakaran Corp Bhd is diversifying into electricity generation.

In a statement to Bursa Malaysia today, CAB Cakaran (fundamental: 0.55; valuation: 1.2)  managing director Christopher Chuah Hoon Phong said the firm signed a memorandum of understanding (MOU) with Japan-based New Chemical Trading Co Ltd and Seri Kedah Corp Sdn Bhd to establish a biomass power-generation business.

The venture will produce fertiliser as a by-product through the incineration of chicken droppings, Chuah said. The MOU is the firm’s first step to venture downstream in the poultry farming business.

“This is a new and exciting business venture for CAB Cakaran where we are utilising our current waste to generate recurring income for the company going forward,” he said.

Under the MOU, which will be valid for 12 months from today, two joint venture (JV) companies will be formed.

New Chemical Trading and Seri Kedah will form a JV company (JV1) for the licensing of specific technology and know-how related to biomass power generation.

JV1 will be responsible for the maintenance of the processing facilities and equipment, as well as the marketing of the fertiliser.

The second JV company (JV2) will be incorporated by CAB Cakaran, New Chemical Trading and Seri Kedah. The focus of JV2 will be on biomass power generation and the sale of the power produced.

CAB Cakaran will hold 51% in JV2, while the remaining 49% will be held by Seri Kedah and JV1.

"Seri Kedah's role will be to provide JV2 with support for the necessary grants, subsidies, business licenses and approvals in Malaysia. It will also provide support for the approval or contracts from Sustainable Energy Development Authority Malaysia (SEDA) and Tenaga Nasional Bhd or other r elevant authorities to run the biomass and solar photovoltaic

At 2:35pm, CAB Cakaran shares traded unchanged at RM1.13 for a market capitalisation of RM148.7 million.

A total of 540,300 shares were traded.

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