KUALA LUMPUR (Sept 26): Tiong Nam Logistics Holdings Bhd is investing RM200 million in capital expenditure (capex), which will go towards the construction of three new warehouses, the expansion of its truck fleet and for the logistics business.

The group said 90% of its capex will be used for the construction of a 190,000 sq ft warehouse in Senoko, Singapore, as well as two other warehouses in Pasir Gudang and Kempas, Johor, which are currently in the planning stage.

The three warehouses are expected to be completed in its financial year ending March 31, 2022 (FY22).

Meanwhile, the remaining 10% of its allocation is earmarked for two smaller warehouses and related support buildings to be located in Johor, as well as new trucks for the logistics business.

Upon completion of the new buildings, Tiong Nam’s warehousing capacity would increase by more than 10% to exceed six million sq ft from 5.6 million sq ft as at March 2020.

Tiong Nam managing director Ong Yoong Nyock said the Covid-19 pandemic has clearly showed that the group’s services are essential for many industries, including food and beverage, fast moving consumer goods and electrical and electronics, which has helped it achieve high utilisation rates, averaging at 80% for its 83 warehouses.

“The expanded facilities in key logistic hubs in Southeast Asia therefore allow us to support the increasing needs of our customers, as well as continue broadening our client base. 

“This falls in line with our efforts to strengthen our market position and capabilities in Malaysia and the region, towards becoming a preferred total logistics provider that supports the growth requirements of domestic and global businesses,” said Ong in a statement.

The group saw a surge in demand for warehousing space during the Movement Control Order (MCO) in March, which helped mitigate lower logistics deliveries and business inactivity.

The staggered relaxing of the MCO between April and June 2020 had helped Tiong Nam in gradually resuming its logistics deliveries.

“Additionally, our deliveries have rebounded to pre-MCO levels which would contribute to a healthier performance in FY21. This is supported by resuming business and consumer activities across many sectors, with the increase led by the food and beverage, fast moving consumer goods, as well as electrical and electronics sectors,” Ong said.

Tiong Nam was last traded at 39 sen, translating to a market capitalisation of RM179.7 million.