PETALING JAYA: Tiong Nam Logistics Holdings Bhd will continue to experience cost pressure going forward and its rental adjustments are moving at a slow pace in the current challenging market.
The impact of the diesel subsidy removal in the future on its operations is forecast to be muted as its transportation contracts had embedded the clause to fully pass on the change in fuel price to clients.
However, the situation may change for the better as Tiong Nam is betting on a contract win in warehouse management from a multinational company (MNC).
It expects the potential property sales at the Sedenak Tech Valley to help drive its earnings.
TA Research, however, has not factored in contributions from the Sedenak Tech Valley asset.
It maintained its target price for the stock at 76 sen per share but upgraded the stock to “buy’’ from “sell’’ previously.
It said despite the increasing operating costs, the mega warehouse would be profitable with a full-year profit before tax contribution of RM8mil.
For the warehouse management contract, Tiong Nam has submitted its tender to an MNC.
It expects some property sales from Sedenak Tech Valley in FY24, although it has not submitted the development order to the authorities.
The development will begin after yhe signing of sales and purchase agreements or lease agreements with prospective clients.
The logistics company is negotiating with five interested parties from Malayisa, China and Singapore on potential sales or lease of warehouses within the technology park.
Tiong Nam’s existing housing development at Kota Masai has secured new sales of RM32.4mil out of total RM44.7mil gross development value (GDV) in FY23.
Given the decent take-up rate of 72.5%, the company will roll out phase 1B of Kota Masai project with an estimated total GDV of RM50mil in FY24.