KUALA LUMPUR (Dec 4): Teleport, the logistics arm of Capital A Bhd (KL:CAPITALA), is expected to close its financial year ending Dec 31, 2024 (FY2024) with a record-high annual revenue of more than RM1 billion, according to its chief executive officer Pete Chareonwongsak. 

This will be fuelled by a higher parcels volume, which is projected to double to 350,000 parcels per day by year end, up from 170,000 in the first half of 2024 (1H2024), Pete said.

The group's earnings before interest, tax, depreciation and amortisation (Ebitda) are expected to reach at least RM100 million in FY2024, he told a media briefing on the company’s third-quarter results and 2025 outlook on Wednesday.

“We are extremely confident we will deliver two million parcels a day [by 2025]. As of today, we have more than 200,000 parcels — and really, that scale is coming very quickly, with more capacity from third-party airlines,” he said.

Teleport’s Ebitda for the three months ended Sept 30, 2024 (3QFY2024) jumped more than sixfold to RM21.9 million, against RM3.4 million a year ago, as revenue surged 52% to RM286.7 million from RM188.9 million.

Its after-tax loss for the quarter amounted to RM4.95 million.

Capital A had provided the quarterly after-tax results for each reportable segment for the first time in the first nine months ended Sept 30, 2024 (9MFY2024). Cumulative Ebitda for Teleport in 9MFY2024 was RM60.1 million, on the back of revenue of RM736.10 million.

Teleport's current network comprises three narrow-belly air freighters, the belly capacity from AirAsia’s enlarged aviation umbrella, and 40 other global airline partners, with 10 additional airlines partners in the pipeline in 4QFY2024.

Teleport is determined to maintain its growth trajectory and justify its billion-dollar valuation, which may help offset any potential revenue loss resulting from the sale of Capital A’s low-cost airline business to AirAsia X Bhd (KL:AAX).

“This is a billion-dollar business, so we have to have the earnings to justify a billion-dollar business,” Pete said. “Most billion-dollar businesses in logistics typically trade at a multiple of their earnings. Therefore, to justify a valuation of a billion dollars, you can imagine the earnings trajectory we need to achieve,” he said.

Teleport's parent Capital A is currently fixing its finances to exit its Practice Note 17 (PN17) status. Capital A CEO Tan Sri Tony Fernandes said in October the group could exit the status by year end, ahead of its previous target of 1H2025.

Once Capital A disposes of its aviation business, which is scheduled to be completed by year end, it will be left with a projected 18.48% stake in AAX.

Capital A’s other key businesses include Asia Digital Engineering Sdn Bhd (ADE), in-flight caterer Santan, super app Move Digital, and e-wallet unit BigPay.

Teleport secured a US$50 million (RM220 million) credit facility in 2023, which has been instrumental in expanding its operations.

"That (the credit facility) helped us grow. We still actually have almost all that cash in the bank. Believe it or not — this is because our business model is like working capital. You use it and then you grow, and then you get it back," Pete said.

While Teleport is comfortable with its current financial position, the company is exploring additional funding opportunities to further accelerate its growth.

“We would like a little bit more [capital], so that we can go as fast as we can,” Pete said. “So I think there’s one more round next year,” he said.

In the meantime, he said the company will prioritise restructuring its existing debt to support any potential initial public offering (IPO).

At Wednesday's noon break, shares of Capital A were trading half a sen or 0.5% lower at 99.5 sen, valuing the group at RM4.30 billion.

Shares of AAX, meanwhile, were trading unchanged at RM1.92, giving it a market capitalisation of RM858.38 million.