GDEX eyes growth in robust Southeast Asian market
KUCHING: GDEX Bhd (GDEX) is optimistic about growth prospects in Southeast Asia, with its operations in Vietnam and Indonesia performing better on the back of recovering economies.
For the first quarter ended March 31, 2022 (1Q22), the group recorded revenue of RM15.1 million from its Vietnam operations, up 21.8% from the corresponding prior quarter ended on March 31, 2021, thanks to an increase in express deliveries and warehousing. the activity of its subsidiary Noi Bai Express and Trading Joint Stock Company (Netco).
In addition, the share of profit from associated companies, mainly due to the group’s Indonesian business under PT Satria Antaran Prima Tbk (SAP Express), recorded a year-on-year increase of 18.9% to reach RM1 million in 1Q22 thanks to to the improvement of the activity and the volume of delivery in Indonesia.
“Our regional investments are poised to benefit from the post-Covid-19 economic recovery, and we are already seeing positive signs operationally as commercial and consumer businesses in Vietnam and Indonesia have begun to recover from significantly,” said GDEX Managing Director Teong Teck Lean.
“With the reopening of international borders, we are intensifying our efforts to pursue improvements in our regional operations, in order to generate greater resilience and synergies for the wider group.
“We aim to become a stronger and more significant player in Southeast Asia, driven by our GDEX 2.0 strategy, which will pave the way for our sustainable and long-term growth.”
GDEX entered the Vietnamese market in 2019 with a 50% stake in Netco, a major local express service provider serving major multinational and local companies.
At the same time, the group’s presence in Indonesia began in 2016 with a 44.5% stake in SAP Express, a fast-growing logistics services player with 7,200 sites in the country.
The group unveiled its GDEX 2.0 strategy in April 2022, which aims to build a platform-based ecosystem that will propel its regional growth.
Supported by innovative digital platforms and solutions, the ecosystem will provide an enriched experience for small and medium enterprises and multinationals.
The group also intends to expand its portfolio of activities and investments, through mergers and acquisitions as well as partnerships with synergistic companies.
Despite the increased regional contribution, the group’s revenue from its Malaysian operations decreased by 17.7% to RM76.4 million.
The decline in domestic revenue was the result of stiffer competition and more new market entrants.
Overall group revenue was RM91.9 million in 1Q22, down 13.2% from the corresponding three months last year.
Geographically, Malaysia and Vietnam collectively accounted for the majority of revenue at 99.6%, while Singapore contributed the remainder at 0.4%.
Meanwhile, the group recorded a net loss of RM1.9 million in 1Q22, compared to a net profit of RM5.6 million in the corresponding three months, mainly due to stiffer competition in its operations in Malaysia.
“While the group has remained in a healthy position overall given our strong presence in three major Southeast Asian markets, we continue to face headwinds in Malaysia due to predatory pricing on the back of various new market entrants, as well as higher operating costs.
“The competitive pricing environment is destructive, with some players offering free delivery service to increase their volume.
“However, this practice seems to be slowing down and we expect the volume of shipments to gradually return.
“In this regard, we are actively collaborating with key industry stakeholders to improve industry resilience.”
“Our efforts include proposing an industry framework that promotes healthy competition and supports the profitability of logistics and courier companies.
“We believe that closer cooperation between government and industry will lead to greater long-term sustainability of the industry.”