Tri-Mode to have foreign logistics partner


Trip-Mode System (M) Bhd will collaborate with an international e-commerce platform as its logistics partner into Malaysia by the second half of the year.

Tri-Mode group MD Datuk Hew Han Seng said the company is currently negotiating with an e-commerce platform in order to bring it into Malaysia.

“We are currently discussing with the principal owner now. It is an international platform and we plan to become their exclusive logistics partner to bring them into Malaysia,” he said at the company’s listing in the ACE Market yesterday.

However, the company would not reveal the name or the origin of the e-commerce platform for the time being.

The Malaysian Reserve previously reported Tri-Mode’s acquired a licence to operate an e-commerce platform’s logistics on Sept 1, 2017.

The set-up cost is expected to range between RM1 million to RM1.5 million for software, hardware and marketing, which the company will fund internally.

The company’s shares debuted 11 sen less than its initial public offering (IPO) price of 61 sen and 259,000 in volume after Bursa Malaysia opened, which was driven by buyers’ cautious attitude since the change of the ruling government post the 14th General Election.

Hew said he is not worried about the lower opening price. “This is because investors can look forward to medium and long-term potential of our stocks,” he said.

The company’s share price is valued at 56 sen by Inter-Pacific Research Sdn Bhd, which is based on a 13 times earnings per share for the company’s financial year 2019 (FY19) on the back of its growth potential in sea freight rates pricing strategy.

The company also expected the company to distribute 50 sen in dividend in FY18 and FY19 for a 0.82% dividend yield, based on its dividend policy to distribute 30% of its earnings to shareholders.

Hew said the integrated logistics service provider has raised total proceeds of RM26.4 million from its IPO, which consists of 8.3 million new shares that registered an over-subscription of 3.74 times.

“Around 58.8% of the proceeds will be for business expansion, which includes construction of proposed headquarters and distribution hub, and purchase of prime movers and trailers.

“The 8.9% will be used for working capital and 19% for bank borrowings’ repayment, while the remaining will be to defray the company’s listing expenses,” he said.

He added that the construction of the proposed distribution hub will begin in the third quarter of 2019.

“The hub will be located on a piece of land we acquired in Pulau Indah three years ago and it depends on the developer,” he said.

The group has no plans in expanding its offerings into East Malaysia, while it focuses on the peninsula.

Hew said the company must have a strong foothold in West Malaysia before forming further expansion plans.

The company began its operations in 1992 to provide international freighting for imports, exports and project shipments.

Between FY15 and FY17, the company’s profit margin rose from 4.1% to 7% due to increase in sales’ orders from customers, lower depreciation expense for prime movers and trailers, as well as lower direct labour cost, administrative and finance cost.

The group’s share price closed 13.93% lower at 52.5 sen at 5pm yesterday with some 3.82 million shares traded. On its debut, the share’s intraday range swung between 44 sen low and 55.5 sen high.