PETALING JAYA: Tiong Nam Logistics Holdings Bhd, which returned to the black in the first quarter (Q1), may be in for a better set of earnings for its current financial year ending March 31, 2022 (FY22), underpinned by the potential growth in the logistics and warehousing segment.

       The logistics solutions provider is also on expansion mode for its warehouse business in Malaysia as well as in South-East Asia and China, which would bode well for the group.

       Tiong Nam logistics warehouse

       The dilution of the company’s stake in the loss-making hospitality segment, analysts said, was a timely move as it would not be a drag to the group’s earnings and would position it as a pure-play total logistics solutions provider.

       Tiong Nam recorded a net profit of RM1.55mil in Q1 ended June 30, 2021 from a net loss of RM5.53mil a year ago.

       This was owing to increasing demand for the logistics and warehousing services from existing and new customers.

       The group’s revenue jumped 35.7% to RM166.91mil in the quarter compared to RM122.99mil a year ago.

       This was driven mainly by the logistics and warehousing services, and property development segments.

       MIDF Research said despite the lower-than-expected Q1 earnings, it was positive on the potential growth of the logistics and warehousing segment, as it continued to lend support to the property development and hotel and dormitory segments.

       “Moreover, earnings will no longer be dragged down by the loss-making hospitality segment, following the dilution of the group’s stake in Terminal Perintis Sdn Bhd (TPSB).

       “In view of the below-than-expected Q1 earnings, we revise downward our earnings estimate for FY22 to RM17.4mil,” the research house said in its report.

       MIDF has also revised and lowered the target price of the stock to RM0.85 per share and downgraded it to “neutral” from a “buy” previously.

       Tiong Nam Ong Yoong Nyock

       In a recent statement, Tiong Nam managing director Ong Yoong Nyock (pic above) said the group was seeing significant logistics demand across the wide range of industries it was serving in line with the improving vaccination rates in the country and gradual reopening of various sectors.

       “The group is in the midst of expanding its warehousing network,.

       “This will see its total warehousing capacity rise by 21% to 7.5 million square feet by FY24 ending March 31, from 6.2 million square feet currently.

       “Among the notable expansions include a new dedicated warehouse to be built at Senai Airport City totalling up to 1.1 million square feet in built-up area for lease to a renowned multinational company, which is expected to complete in FY24,” he added.

       For the current FY22, Ong is confident that the group would record a stronger performance in view of the vaccination rate improving in the country and the implementation of the National Recovery Plan.