LOCAL courier firm GD Express Carrier Bhd (GDEX) will invest RM8 million next year to expand its express delivery operations outside Malaysia to include Singapore and Thailand.
The Mesdaq-listed company now has 40 stations and works with 35 agents and affiliates in the country. For overseas deliveries, it uses the services of international air express companies.
“We hope to enter Singapore and Thailand by the first quarter of next year. We will adopt the same concept as in Malaysia, where we will set up both our own stations and work with agents and affiliates,” GDEX executive deputy chairman and chief executive officer Teong Tek Lean told Business Times.
It recently received regulatory approval to proceed with raising private placement funding totalling RM18.9 million.
Of the total proceeds from the private placement, RM6.5 million will be used to purchase and improve its 60,000 sq ft hub cum warehouse in Petaling Jaya, RM6 million for business expansion in Thailand and RM2 million for business expansion in Singapore.
The remaining proceeds will be used for market development in the South-East Asian markets and to fund working capital.
The group recently warned that its net profit for the current fiscal year ending June 30 2006 will be smaller than expected due to higher fuel costs and increased expenditure.
However, Teong expects the group’s performance for the next two fiscal years to improve as most investments will be completed by the end of this year.
“We have only Sabah and Sarawak to invest in during the next fiscal year ending June 30 2007, but we will only be setting up new stations at areas that make economic sense. For the rest, we will work with agents and affiliates in the respective areas,” he said.
GDEX requires a capital investment of some RM400,000 for each new station.
There are currently 105 express delivery players in Malaysia and GDEX commands a 4 per cent market share.
However, the group aims to increase its market share to 15-20 per cent, said Teong, without giving a timeframe.
“The leading players in this market are Federal Express, United Parcel Service, DHL and TNT, which combined captures a 70 per cent market share of Malaysia’s RM1 billion express delivery business, with the rest coming from local players,” said Teong.
As part of plans to increase its market share in the local market, GDEX is targeting to capture some of the business currently held by the foreign players through its customised logistics solutions.
Teong believes that demand for customised logistics solutions is expected to grow faster this year as more companies outsource their non-core functions such as warehousing and logistics.
This business now contributes 25 per cent to the group’s revenue.