KUALA LUMPUR: Tiong Nam Logistics Holdings Bhd plans to invest RM336.4 million in capital expenditure (capex) to expand its warehousing capacity, in line with increasing demand for its logistics and warehousing segment services.
Tiong Nam said its wholly-owned Tiong Nam Logistics Solutions Sdn Bhd had signed a sales and purchase agreement with Senai Airport City Sdn Bhd to acquire two plots of vacant land with an aggregate size of 62.6 acres within a free commercial zone in Senai Airport City, Johor Bahru for RM136.4 million.
Tiong Nam plans to build a new warehouse with a 1.1 million sq ft built-up area on the plots, which is estimated to cost RM200.0 million.
With the planned new warehouse, the company's total warehousing capacity will increase from 6.0 million square feet as of March 31 2021 to 7.3 million sq ft in 2023.
Managing director Ong Yoong Nyock said the latest capacity expansion would position Tiong Nam as the undisputed leader in terms of total warehousing capacity in Malaysia.
"The company's continued expansion follows on the heels of our recent warehouse addition via VM Andaman Sdn Bhd (VMA), amid strong growth in demand for our logistics and warehousing segment, such as from essential items amidst the work-from-home normality.
"We also serve an increasing number of businesses seeking to outsource their warehousing and logistics functions to reliable total solutions providers," he said in a statement.
Hence, said Ong, the expansion was timely and would enhance Tiong Nam's capabilities to capture more growth opportunities, alongside the promising long-term economic and development outlook of Malaysia and across Southeast Asia.
Tiong Nam had on June 9 this year announced the acquisition of VMA together with its warehouse asset measuring 0.2 million sq ft in built-up area located in Pelabuhan Tanjung Pelepas, Johor.
The acquisition is expected to be completed in September this year.
For the planned new warehouse in Senai Airport City, Tiong Nam will submit building plans to the local authorities in 2021 and is targeting the completion of the new warehouse in the second half of 2023.
The acquisition will be funded by both internally generated funds and bank borrowings.