KUCHING: Local integrated logistic players such as Tiong Nam Logistics Holdings Bhd (Tiong Nam), Century Logistic Holdings Bhd (Century) and Xin Hwa Holdings Bhd (Xin Hwa) are still gearing up to leverage on an impending e-commerce boom.
In a sector update by the research arm Kenanga Investment Bank Bhd (Kenanga Research), it highlighted that all three major integrated players are still venturing to expand related delivery services to increase their exposures in e-commerce.
Most notably, logistics giant Tiong Nam was observed to be particularly ambitious as the group expanded further down the supply chain again with their foray into the last-mile delivery space under the brand name ‘Instant’.
The move follows after the group’s previous venture into the cross-border trucking scene, aimed to capitalise on the movement of e-commerce goods to-and-from Shenzhen.
And can be seen as an attempt to emulate the success Pos Malaysia Bhd (Pos) and Gdex Express Sdn Bhd (Gdex) has seen as they continue to be the main earnings beneficiaries of the growing e-commerce trend.
To recap from the last quarter, both parcel delivery players have recorded health growths of 15 to 17 per cent year over year (y-o-y) growth in their parcel delivery revenue.
And this positive trend is expected to continue in the long-term.
Similarly, Century is also striving to be a courier player and has also recently announced its securement of a non-universal service license to operate its courier services, allowing them to be one step closer to launching their last mile business.
On the other hand, Xin Hwa has instead decided to first branch directly into the e-commerce industry directly with its recent acquisition of a 50 per cent stake in Yiwugou Ecommerce Sdn Bhd (YESB) for a total cash consideration of RM500,000.
YESB is principally involved in e-commerce transactions as it owns and runs a moderately large e-commerce platform – ‘e5buy’.
According tolocal media, Xin Hwa managing director Ng Aik Chuan said the acquisition of YESB would also provide Xin Hwa with an opportunity to extend its scope of logistics services, which may include courier services as well as door-to-door services.
Commenting on Tiong Nam’s outlook, Kenanga Research believed the group has an advantage over other players in the pursuit of e-commerce business as they are able to provide clients with seamless logistic solutions as a full-fledged logistic player.
“Coupled with its warehousing capacity expansion plans, we do not discount Tnlogis securing additional contracts in the upcoming future.
“However, we also do expect initial earnings impact from these new ventures to be minimal due to gestation, but potentially playing out as a longer-term positive.” Despite the long-term positivity in Tiong Nam, the research arm has opted to stay side-lined on the entire sector due to its lofty valuations and maintained a market perform rating with a target price of RM1.71.