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Published: Friday February 20, 2009 MYT 9:10:00 PMUpdated: Friday February 20, 2009 MYT 9:17:01 PM
PETALING JAYA:Integrated tracking solutions provider Grand-Flo Solution Bhd plans to use its newly acquired Hong Kong-based company to expand in the China and Hong Kong, says president and managing director Derrick Tan.
The acquisition will help improve overseas contribution to group profit to 60% from from about 50% last year, he said.
“The next big contracts will come from China and Hong Kong,” he said after the company EGM Friday.
Grand-Flo’s shareholders approved the purchase of tracking solutions company CL Solutions (China) Ltd for HK$25 million (RM10.64 million).
Under the agreement, CL Solutions will provide a cumulative profit guarantee of HK$9 million over two years, for 2008 and 2009.
The acquisition is expected to be completed by the end of this month.
The company has not planned for any more acquisitions this year.
Grand-Flo bought CL Solutions at five to six times price to earnings ratio, which Tan said is low, considering the company has a wide clientele base in Hong Kong and China.
CL Solutions’ customers include Federal Express, Nippon Express HK, Philip Morris and Wal-Mart China.
Meanwhile, Tan said the second half of last year was very challenging for the company. Its net profit for the third quarter ended September 30 plunged 98% to RM24,000.
He attributed the poor performance to lack of big projects, political uncertainty and global financial crisis.
“We had a pipeline of projects but a lot of the companies deferred the implementation of projects.
In addition, customers from the manufacturing sector (such as electronic) are not doing good (cutting their expenditure),” he said.
This year, Tan expects the company to achieve better results, as he is optimistic on the group’s long-term growth in China.
Grand-Flo’s tracking solutions service facilitates asset tracking and sales force automation, and enables automated collation of real-time data using barcode technology to assist company in improving business efficiency.
Grand-Flo has operations in Malaysia, Thailand, Vietnam, Hong Kong and China. It has barcode label manufacturing facilities in Malaysia, Thailand and Vietnam.
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