KUALA LUMPUR (Sept 20): Integrated construction and property firm PTT Synergy Group Bhd (PTTS) has diversified into the warehouse leasing business as it seeks alternative sources of revenue from recurring income properties.

On Wednesday, PTTS said its wholly owned subsidiary PTT Development Sdn Bhd has signed a lease agreement for the leasing of a warehouse with third-party logistic player Longterm Distribution Sdn Bhd. Under this agreement, Longterm Distribution will assume the role of master tenant and warehouse operator.

The leased warehouse, namely PTT Space Elmina Logistic Hub, will be situated within the prestigious Elmina Business Park, Shah Alam. PTTS will construct a single-storey warehouse equipped with automated storage and retrieval system (ASRS) technology on a freehold industrial land spanning approximately 6.5 acres.

The construction is scheduled to commence in January 2024 and the handover is anticipated by the end of 2025. PTTS managing director Teo Swee Phin said the facility is poised to meet the highest industry standards for warehousing and distribution, offering unparalleled quality and efficiency.

In a press briefing, Teo said the group has allocated RM160 million for the construction of the warehouse and that the new venture is expected to contribute positively to the group in the future.

Under the leasing agreement with Longterm Distribution, Teo expects the company to benefit from recurring income with an estimated annual rental income of RM11 million. The fixed lease term is 10 years with an option to renew the lease at the expiration.  

PTT Space Elmina Logistic Hub at Elmina Business Park represents just the beginning of PTTS’ vision to create a series of cutting-edge logistics spaces. PTTS plans to expand its footprint in the industrial space segment, and is dedicated to delivering top-tier warehousing solutions while concurrently reducing the carbon footprint of its clients.

In a statement, Teo said this lease agreement is a testament to its unwavering dedication to innovation and excellence in the total intralogistics solutions industry.

Longterm Distribution chief executive officer Patrick Kok said this lease agreement, combined with the forthcoming ASRS-equipped facility, will significantly enhance its logistics capabilities, enabling the company to deliver even more efficient services to its clients.

In June, PTTS had partnered with Oriental Material Handling (Malaysia) Sdn Bhd (OMH) to venture into the automated warehousing and total intralogistic solution segment in Malaysia and Southeast Asia.

OMH is wholly owned by OMH Science Group Co Ltd, the largest intelligent logistic equipment manufacturer and total intralogistic solutions provider in China.

Separately, PTTS has inked a memorandum of understanding with Rhong Khen International Bhd, formerly known as Latitude Tree Holdings Bhd, to establish a system pallet business that is aimed at meeting the growing demand for streamlined supply chain management and logistics services within automated intralogistics warehouses.

System pallet serves as the structural foundation for the efficient handling and storage of unit load systems. The pallet will also be used in the upcoming PTT Space Elmina Logistic Hub.

Both PTTS and Rhong Khen are jointly committed to the successful realisation of the business, which includes the production and supply of 200,000 units of system pallets within a two-year timeframe from the definitive agreement’s effective date.

Furthermore, both parties will undertake the development, supply and maintenance of the pallets to support the ecosystem of the automated intralogistics warehouse.

At 2.45pm, shares of PTTS were down one sen or 0.92% to RM1.08, giving the group a market capitalisation of RM194 million.

Rhong Khen shares were unchanged at RM1.36, translating into a market capitalisation of RM264 million.