Mainstream
MMAG grows logistics business
F Saad 
Wong (left) and Chong are bullish on the future of the logistics outsourcing industry
advertisement[x]

MMAG Holdings Bhd managing director Wong Eng Su is excited over the company’s entry into the logistics and courier business.

It spent about RM11 mil in two years to expand its logistics network under a wholly-owned subsidiary, Line Clear Express and Logistics Sdn Bhd, and with that, completed its transformation from an ICT-products focused company to a logistics player.

The company also expanded its fleet of vehicles from 20 to 70, while staff numbers grew from 30 to 220 within two years. MMAG has over 13 branches.

It plans to raise another RM74 mil via a rights issue. Of this, about RM40 mil will be used to expand the logistics business.

 

Bonded warehouses

In the long term, MMAG is mulling venturing into bonded warehouses and introducing halal storage facilities.

For Q1 ended June 30, it posted a lower net loss of RM1.66 mil, from a loss of RM2.73 mil in the previous corresponding quarter.

Revenue declined 24% to RM47.73 mil from RM63.04 mil due to lower income from its ICT products distribution segment.

MMAG made headlines recently when Innofarm Sdn Bhd, the single largest shareholder of egg and poultry producer Lay Hong Bhd, emerged as its substantial shareholder with 13.05% stake.

Innofarm is now MMAG’s second-largest shareholder after Marina Teguh Sdn Bhd (14.87%), which is controlled by Wong, executive director Jeff Chong Koon Meng, and chief financial officer Kenny Khow Chuan Wah.

With Lay Hong’s entry as a major shareholder and client, MMAG has moved into a new warehouse covering 20,000 sq ft. This enables it to increase capacity from 3,000 deliveries daily to up to 9,000.

Chong tells FocusM that Lay Hong’s share purchase in MMAG is positively viewed, while Wong says the new warehouse is four times its present one.

“It has been built to suit the client’s needs. We have built it with the aim of having long-term relationships with our client.

“The warehouse can be compartmentalised for different clients’ needs,” says Wong.

Due to the high capital expenditure involved in land purchase and warehouse construction, the company says more manufacturers or firms are exploring ways to outsource logistics services.

 

Competition

Wong says Line Clear’s willingness to adapt to market demand and provide cash on delivery (COD) services differentiates it from others.

“Malaysians like to see an item first before paying for it. If they don’t like it, they can choose not to accept the item.

“This saves on unnecessary reverse logistics, time, and helps optimise cost.

“It also gives us access to customers who do not use credit or debit cards, or online banking,” says Wong.

To reduce its business risk, about half of Line Clear’s business comes from business-to-business segment which provides the organisation with some stability.

MMAG has also partnered TM’s Webe and Digi under the dealer-owned-dealer-operated model, apart from being the sole distributor of ZTE mobile phones in the country

MMAG has also partnered TM’s Webe and Digi under the dealer-owned-dealer-operated model, apart from being the sole distributor of ZTE mobile phones in the country.

Wong was previously GD Express Carrier Bhd executive director/chief operating officer before quitting in April 2015.

In February 2015, Chin Boon Long, the then managing director of MMAG (previously known as Ingenuity Consolidated Bhd) resigned for “health reasons and other personal commitments”.

Chin then had 9.22% stake in Ingenuity Consolidated through Firstwide Success Sdn Bhd.

Wong bought Chin’s entire stake in Firstwide in March 2015. This immediately made him a substantial shareholder of Ingenuity Consolidated.

“The logistics business is demanding and always changing. We cannot wait for clients to tell us about the future and need to act now,” Wong says.



This article first appeared in Focus Malaysia Issue 254.