//NST Business
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KUALA LUMPUR: Xin Hwa Holdings Bhd (XHH) expect earnings from new contracts for cargo transportation services under the company's warehousing segment to remain strong for the rest of the year.
Managing director Ng Aik Chuan said the segment has been relatively stable even during the Movement Control Order (MCO) period, however, the company has been continuously bidding for new contracts.
"The company is expecting earnings to maintain until the economy picks up and once our Shah Alam warehousing facility construction is complete," he said.
Ng noted that the company's Shah Alam warehousing facility expansion is due for completion between the fourth quarter (Q4) of 2020 and first quarter (Q1) of 2021 and operation is expected to commence between Q1/Q2 of 2021.
The expansion of the Shah Alam facility, or the company's e-fulfillment centre, comprises a 7-storey office and a 3-storey warehouse, involves a cost of RM73 million.
Upon completion, the facility adds approximately 300,000 square feet of warehousing space, bringing the group's total available warehousing space to approximately 1.0 million square feet.
As for XHH's Integrated Logistic Solution hub in Pasir Gudang, Johor, the company plans to commence infrastructure works around Q4 of 2021 or Q1 of 2022 as it presently in discussion with contractors for the construction.
The Pasir Gudang hub will primarily involve freight forwarding, warehousing, transportation and other related activities.
When asked on the outlook for the logistics industry in Malaysia for the rest of the year, Ng anticipate an uptake in the logistics industry for the next 3-4 months, albeit a slow one, due to the resumption of business activities in the country.
"In the long run, we believe as the economy starts to recover, we will see normalcy return to the logistics and warehousing sectors as halted projects are restarted.
"Further, with the surge in e-commerce, warehousing and the overall supply chain services industries is expected to register a compounded annual growth rate (CAGR) of 9.3 per cent per year until 2023 and is bound to benefit positively in the long term. We hope that this will then bring about a positive turn for the company in the long run," he said.
Ng pointed out that the company's utilisation rate of its warehouse capacity is at approximately 90 per cent, quite close to full capacity.
"Once the Shah Alam and Pasir Gudang facilities are completed, the next step is to promote our warehousing services in Greater Kuala Lumpur area.
"We believe we can capture the increasing demand with our competitive rates, especially when e-commerce is booming and global brands are expanding into the region," he said.
Touching on fleet, Ng said as at June 2020, XHH fleet size stands at 1,652 vehicles comprising trailers, prime movers and trucks.
"It is still our goal to expand our fleet. But we are doing it in a prudent manner by looking at our liquidity and the overall economic condition. If the economy is recovering slowly, then the expansion for our fleet will be slower," he said.
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