KUALA LUMPUR: Logistics and warehousing provider Tiong Nam Logistics Holdings Bhd is allocating RM100 million in capital expenditure (capex) for the financial year ending March 31 2018 (FY2018).
The capex would be used to buy new vehicles to grow its transportation fleet, build new warehouse and strengthen its newly-established Southeast Asia to China cross border logistics network, Tiong Nam said in a statement today.
Managing director Ong Yoong Nyock this is in view of the expected demand growth for logistics services on the back of increasing regional trade, as well as a burgeoning e-commerce sector.
“Looking ahead, we are confident that our expanded infrastructure and improved range of services would provide businesses with greater regional reach, granting them the competitive edge and agility in today’s global marketplace,” he said in the statement.
Tiong Nam invested RM286.8 million spanning FY2016 and FY2017, during which the group expanded its presence into Vietnam, Myanmar, and China.
It also saw its total warehousing capacity increase to 5.3 million square feet as at end-FY2017, from 4.8 million sq ft, as at end-FY2016.
Meanwhile, construction progress of a new sales office and 32,000 sq ft warehouse in Laos, which began in FY2017, is already at 15 per cent and is on track to be completed by end-FY2018. This would further expand the Group’s regional network.
With the new capex, Tiong Nam expects its warehousing capacity to increase 700,000 sq ft to reach 5.9 million sq ft, by end-FY2018.
It has a longer term target to reach 7.1 million sq ft in total warehousing capacity in FY2020.
Tiong Nam recorded revenue and net profit of RM140.9 million and RM700,000 million respectively in the first quarter, compared to RM131.1 million revenue and RM13.4 million net profit, a year ago.
The revenue growth was led by higher contribution from the logistics and warehousing services segment which rose 12.9 per cent to RM122.0 million from RM108.1 million a year ago. This was attributed to new customers and larger orders from existing customers.
Revenue from the Group’s property development segment dipped 18 per cent to RM18.8 million compared to RM23.0 million in the previous year, due to construction progress for one of the Group’s flagship projects, SILC 7, nearing the completion stage, which also led to lower profit contribution.