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Century Logistics in advanced talks to buy document firm

KUALA LUMPUR: Century Logistics Holdings Bhd is in advanced talks to acquire a document management services company, said its managing director Steven Teow.

“It won’t be a big acquisition and we will fund it via internal funds. We like their IP (intellectual property) and don’t want to reinvent the wheel,” he told a press conference after the group’s extraordinary general meeting yesterday.

He said the proposed acquisition would complement its existing document storage business or data management services. It holds Australia-listed Recall Holdings Ltd as its benchmark.

The supply chain management and logistics provider is targeting revenue of RM300 million for the financial year ending Dec 31, 2015 (FY15) and RM500 million within the next two to three years, driven by organic growth and additional revenue from the proposed acquisition of the document management services company.

It posted revenue of RM255.81 million in FY13. For the nine months ended Sept 30, 2014, it posted revenue of RM209.55 million, up 15.2% from RM181.81 million a year ago.

Teow said Century Logistics continues to be on the lookout for potential M&A activities.

“Currently, we have about RM60 million cash balance. We are looking at potential acquisitions and have actually parked aside the funds for good acquisitions,” said its finance director Edwin Yeap.

However, Teow said Century Logistics will take a defensive and cautious mode as the economy this year and the next is expected to be “turbulent”.

“On the transport side, our entire [container] haulage industry is suffering due to competition. But on the conventional segment, we’re quite proud to say that we’ve a strong captive base and hope to do quite well there.

“For procurement and logistics, we have many major multinationals which have been with us for more than 10-15 years and which we believe are to show good results as well,” said Teow.

He added that Century Logistics will look at certain “captive niche pockets” such as leveraging its land positioning in Johor to cater to multinationals that wish to grow their supply chain solutions as well as do dedicated transport runs for customers from beginning to end.

“Logistics is a challenging [business]. We are also looking to diversify our earnings in logistics-related businesses to be able to provide value-added services to our customers,” said Teow.

He added the impact of falling crude oil prices on Century Logistics’ net profit is not drastic as it has a diversified mix of businesses and customers in its supply chain.

Teow noted that while the group does not have an official dividend policy, it had distributed about 50% of its net profit to shareholders prior to its share split and bonus issue in October last year, and hopes to remain doing so.

On a news report by The Edge Financial Daily on Monday that Century Logistics’ major shareholders who collectively hold 44% are looking to sell their equity interests in the group, Teow reiterated that they are not looking to do so.

“If I’m going to sell out together with my uncle (Century Logistics executive chairman Datuk Richard Phua Sin Mo), we wouldn’t be doing the Employees’ Share Option Scheme (Esos) today [yesterday],” he said. The establishment of an Esos was one of the resolutions passed by its shareholders yesterday.

Teow added that major shareholders of Century Logistics will ensure continued growth of the group in the years to come with leadership for this charge coming from Phua.

Shares in Century Logistics closed 1.5 sen or 2.29% lower to 64 sen yesterday, bringing a market capitalisation of RM230.7 million.

 

This article first appeared in The Edge Financial Daily, on January 7, 2015.

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