PETALING JAYA: The reopening of international borders is set to benefit Tiong Nam Logistics Holdings Bhd, as the increase in economic activities is likely to spur growth for the company’s logistics division.

       TA Research in a report yesterday said the return of foreign workers would also boost Tiong Nam’s confidence in launching its Kota Masai property project, as the risk of delay would now be diminished.

       “Tiong Nam has postponed the project launch to the first quarter of 2023 from the fourth quarter of 2022, albeit for a smallish gross development value of only RM36mil.

       “With the full economic and border reopening, the company is expected to turn aggressive in developing the remaining landbank of 203 acres at Kota Masai if the first launch receives overwhelming response.” Tiong Nam offers comprehensive logistics solutions.

       Additionally, TA Resarch said the impact of surging oil prices on Tiong Nam will be insignificant, as the company can always pass the rising cost to consumers.

       “At this juncture, the group’s earnings would be insulated by the subsidised fuel until the subsidy is removed.

       “According to management, the group has recently raised the logistics fare by an average of 10% to mitigate the impact of rising maintenance cost for its transportation vehicles.

       TA Research said Tiong Nam foresees little problems to revise the fare again (should it need to safeguard its margins), as demand for logistics services has been on the rise post reopening of all economic sectors in Malaysia.

       Separately, TA Research noted that the heavy downpour last week had not affected Tiong Nam’s headquarters in Shah Alam.

       “However, management is contemplating various ways to minimise the impact, thereby encouraging its clients to buy the flood insurance as well (besides fire insurance) to protect themselves against the potential loss caused by natural disasters.” On the international front, TA Research said the Russia-Ukraine war is expected to complicate global supply chains and potentially exacerbate the current disruptions within the commodity and technology sectors.

       “As such, the company believes that the impact, if any, could be mildly positive, which would see sustained strong demand for warehousing space to pre-empt the global supply shock if the war prolongs.

       “Although Tiong Nam’s warehouses largely cater for storage of finished products, it has received an enquiry recently for a new warehouse for storage of raw materials.” As for the group’s new Senai warehouse, which will be leased out in the beginning of 2024, TA Research said the construction is on-going with piling and foundation works already commenced.

       “According to management, the progress is ahead of target and on track to meet the completion deadline in mid-2023. The award of warehouse management contract would be after the completion of the warehouse.”