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Tiong Nam slashes stake in hospitality unit

22 Jul 2021 / 21:12 H.

PETALING JAYA: Tiong Nam Logistics Bhd today signed a shareholders agreement with Create Fortune Enterprise Sdn Bhd for the latter to acquire a 51% stake in its loss-making hospitality subsidiary Terminal Perintis Sdn Bhd (TPSB) for RM36.7 million.

Currently a wholly owned subsidiary of Tiong Nam, TPSB owns Fraser Place Puteri Harbour in Johor Baru, a 25-storey hotel with 297 rooms. TPSB is also the developer of the adjacent residential block comprising 268 units of serviced apartments worth RM476.7 million in gross development value.

The exercise is part of its streamlining to focus on expanding its core integrated logistics and warehousing services business. The deal would see the loss-making TPSB become an associate company, with its financials no longer consolidated in the group accounts.

Tiong Nam managing director Ong Yoong Nyock said its direction is to grow and improve Tiong Nam’s integrated logistics and warehousing services business.

“The dilution of interest in our hospitality business will not only allow us to focus on enhancing our core strengths, but also free up significant resources for our continued expansion.”

Tiong Nam is in the midst of expanding its warehousing capacity across Malaysia and Southeast Asia, with total warehousing capacity expected to increase to 6.4 million sq ft in 2022, from 6 million sq ft as at March 31, 2021.

Based on TPSB’s loss after tax of RM22.3 million for the financial year ended March 31, 2021 (FY21), the proforma effects of the dilution would see the group’s FY21 profit after tax rise from RM11.9 million to RM23.3 million. The shareholders agreement is expected to be completed on Dec 22, 2021.

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