KUALA LUMPUR (Feb 22): Tiong Nam Logistics Holdings Bhd’s net profit for its third quarter ended Dec 31, 2020 (3QFY21) rose 260% to RM6.41 million from RM1.78 million a year ago thanks to the growth in the logistics and warehousing services segment alongside better cost management.

Earnings per share, accordingly, increased to 1.25 sen, from 0.39 sen.

Quarterly revenue was only 2.17% higher at RM159.2 million, from RM155.89 million in 3QFY20, the group said in a filing with Bursa Malaysia today.

Revenue for its logistics and warehousing services segment increased by 13.9% to RM157.1 million, from RM137.9 million in 3QFY20, on the back of securing new total logistics customers as well as business expansion from its existing customers.

Profit before tax (PBT) for the logistics and warehousing services segment in 3QFY21 grew more than three times to RM13.41 million, from RM4.29 million a year ago.

Other overhead expenses in 3QFY21 fell by 35.3% to RM9.18 million, from RM14.18 million a year ago.

No dividends were announced this quarter.

For the cumulative nine months ended Dec 31, 2020 (9MFY21), Tiong Nam’s net profit slipped 9.2% to RM4.57 million, from RM5.03 million a year ago, while revenue declined by 6.53% to RM431.31 million, from RM461.46 million.

The lower net profit could be attributed to the movement control order (MCO) which has caused both property development, and hotel and dormitory segments to post loss before tax (LBT) in the nine-month period.

In 9MFY21, the property development segment reported LBT of RM11.44 million, versus a PBT of RM1.4 million a year ago, while the hotel and dormitory segment also saw a higher LBT of RM15.22 million, from RM10.96 million in 9MFY20.

On its prospects, Tiong Nam said the group’s core logistics and warehousing services segment is expected to be affected by the slowdown brought about by the Covid-19 pandemic.

“However, the group will continue to strategize to maintain our market shares, focus on operational efficiency, cost control, service innovation to sustain its core logistics and warehousing business over the long term,” said Tiong Nam.

The property development and hotel and dormitory segments, on the other hand, are expected to incur operating loss in FY21.

“Going forward, we view vaccine logistics and distribution as a potential contributor alongside our existing services. Our extensive cold chain facilities and logistics fleet, as well as decades of experience in serving diverse industry requirements, are well suited to support the nation’s vaccination agenda,” said its managing director Ong Yoong Nyock, in a separate statement today.

Tiong Nam had recently inked an agreement with Yong Tai Bhd to provide vaccine distribution logistics services, which include transportation and warehouse storage for the latter’s upcoming Covid-19 vaccines.

“As our logistics and warehousing services segment continues to grow, we are currently expanding our facilities to meet future needs,” said Ong.

He said the company is expecting additional warehousing capacity to come on stream from the ongoing construction of a new facility in Senai, Johor, as well as upcoming ones in Pasir Gudang and Kempas in Johor, and Senoko, Singapore, adding that these new facilities would be completed in stages until the FY22.

The warehouse expansions are part of Tiong Nam’s RM200 million capital expenditure program until FY22. Upon completion, the group’s total warehousing capacity would increase 10% to above 6 million sq ft from 5.5 million sq ft capacity currently, said Tiong Nam.

Tiong Nam’s shares closed 5.5 sen or 6.21% lower at 83 sen today, with some 9.43 million shares done. This brings its market capitalisation to RM438.1 million. Over the past year, it has risen 88.6% from 44 sen.