DRB-Hicom to expand logistics business

Syed Faisal: ‘Our intention for the EGM is to inject all the logistics assets in DRB-Hicom into Pos Malaysia and the reason for this is to grow the logistics business.’

This is part of its 5-year plan to depend less on auto, property

SUBANG JAYA: DRB-Hicom Bhd has a five-year plan to reduce the group’s dependency on its core automotive and property businesses by introducing new service offerings in the areas of logistics and finance.

As it is, the automotive and property businesses contributed 81% to the group’s total annual revenue.

Group managing director Datuk Seri Syed Faisal Albar said the planned asset injection exercises by DRB-Hicom into Pos Malaysia Bhd would make the latter a key logistics player.

“Our intention for the EGM (extraordinary general meeting) is to inject all the logistics assets in DRB-Hicom into Pos Malaysia and the reason for this is to grow the logistics business,” he told reporters yesterday.

Yesterday, DRB-Hicom Bhd’s shareholders approved the exercise to dispose KL Airport Services Sdn Bhd (KLAS) and a parcel of freehold industrial land in Section 28, Shah Alam, Selangor to Pos Malaysia.

KLAS has three main assets , namely, DRB-Hicom Asia Cargo Express Sdn Bhd, KLAS Engineering Services Sdn Bhd and Konsortium Logistik Bhd, which is one of the largest haulage and transport companies in the country.

The deals would be financed with 245.75 million new Pos Malaysia shares at an issue price of RM3.33 per share.

Upon the completion of the proposed disposals, DRB-Hicom’s equity interest in Pos Malaysia will increase to 53.5% from 32.21%.

Syed Faisal said that DRB-Hicom has no plan to take Pos Malaysia private following the exercise and would not pare down it stake in the latter. DRB-Hicom will be seeking a waiver from having to undertake a general offer for the rest of the shares of Pos Malaysia.

Pos Malaysia would be having its EGM on Aug 18 to get its shareholders approval for the proposed acquisition.

Shareholders were told the disposals would enable DRB-Hicom to consolidate its logistics business under Pos Malaysia.

Syed Faisal said that presently DRB-Hicom’s automotive and property businesses contributed about 81% of its revenue, and the remaining 19% was from its services segment that included logistics and Bank Mualamalat.

“Since 2011, DRB-Hicom had been working on reducing its dependency on the the automotive and property sector, which are vulnerable to the economic cycle.

“We decided that the services sector particularly logistics sector is one area where we would like to be in,” Syed Faisal said.

He explained that DRB-Hicom venture into logistics business since July 2011, when the group a stake in Pos Malaysia.

The process followed by its acquisition of Konsortium Logistik in 2014 and Asia Cargo Express in 2015.

“The objective of the EGM is to ensure all these acquisitions that we have done so far in the logistics segment is parked under one umbrella so that the direction and the future business and growth of logistics sector is under one house,” he added.

For the financial year ended March 31, 2016, DRB-Hicom posted a net loss of RM991.9mil from a net profit of RM300.2mil a year ago, mainly due to the poor performance of its automobile manufacturer Proton.