Tiong Nam Logistics allocates RM217.9mil capex for FY23, FY24 to grow logistics, warehousing services division
29 Aug 2022
Tiong Nam Logistics Holdings Bhd is allocating RM217.9 million in capital expenditure (capex) for the financial years ended March 31, 2023 (FY23) and FY24.
The logistics company said the bulk allocation would help grow its logistics and warehousing services division.
“Tiong Nam will channel the significant investments to the company’s warehousing facilities to cater to rising demand for its specialist total logistics solutions,” it said.
Managing director Ong Yoong Nyock said Tiong Nam’s ongoing warehouse asset expansion would prepare the company to capture more growth opportunities as the economy recovers.
Ong said logistics and warehousing services remain as pertinent as ever, as businesses and households rely on efficient supply chains.
“We are committed to reinforcing our position in Malaysia as a leading total logistics solutions provider, with seamless connectivity of our logistics fleet and warehousing presence across all states in the country,” he said.
Of the total capex, Ong said 70 per cent would be allocated to the ongoing construction of a 1.1 million sq ft warehouse in Senai, the company’s largest warehouse facility to date.
He said that upon its expected completion in FY23, the company would lease the facility to Mercedes Benz Parts Logistics Asia Pacific Sdn Bhd for its new regional after-sales logistics centre.
“The remaining 30 per cent of the capex will be allocated to two warehouses in Kempas, Johor and Kulim, Kedah, with a combined space of 0.3 million sq ft,” he said.
Construction of these warehouses is expected to commence in FY23 and be completed in FY24.
Together with warehouses in Malaysia, Singapore, Thailand, and Laos, the new warehouses would increase the company’s total warehousing capacity by 16.2 per cent to 7.9 million sq. ft. in FY24 from 6.8 million sq ft as of March 2022.
Tiong Nam started FY23 on a strong note, with revenue for the first quarter (Q1) ended June 30, 2022, rising 6.6 per cent to RM177.9 million from RM166.9 million in the prior year on stronger demand for logistics and warehousing services in Malaysia.
The company’s logistics and warehousing services segment accounted for 97.0 per cent of total revenue in Q1 2023, recording a 5.3 per cent growth to RM172.5 million in the quarter.
This is driven by acquiring new total logistics customers and business expansion from existing customers.
Meanwhile, the company said its property development segment revenue rose to RM4.6 million in Q1 2023 compared to RM1.2 million previously due to sales of property inventories.
Despite the improved revenue, the company said its net profit stood at RM382,000 in Q1 2023, down from RM1.6 million last year, after accounting for losses in its hospitality associate, Terminal Perintis Sdn Bhd (TPSB), whose hotel assets faced lower occupancy due to the international border travel restrictions.
However, TPSB’s hotel assets have seen increased occupancy rates following the reopening of borders and resumption of leisure and business travel and are expected to return to profitability in subsequent quarters.