KUALA LUMPUR: Singapore Post Ltd yesterday boosted its stake in Ace Market-listed GD Express Carrier Bhd to 27.08% from the initial4.98%, positioning itself as a strategic investor in the Malaysian express delivery and logistics services provider. The acquisition will make the Malaysian company an associate of Singapore Post.
In a filing with Bursa Malaysia, GD Express said it had received notification from its substantial shareholders and directors that they had disposed of a total of 56.84 million shares, representing a 22.1% stake, in GD Express to Singapore Post.
The total purchase consideration was RM45.47 million cash or 80 sen a piece.
The shareholders involved in the transaction were Lau Wing Wat, Kong Hwai Ming, Leong Chee Tong, GD Express Holdings (M) Sdn Bhd and GD Holdings International Ltd.
GD Express also said its board did not foresee any impact of the disposal on the company’s business, financially and operationally. It added that the disposal would not trigger a “significant change in the business direction or policy” of the company.
In a press statement, Singapore Post’s CEO for postal and corporate services Ng Hin Lee said the company had been actively looking for investment opportunities and mergers and acquisitions as part of its diversification and regionalisation strategy.
“This investment in GD Express enhances our network and provides us with a platform to tap the growing logistics market in the region,” said Ng.
GD Express executive deputy chairman Teong Teck Lean said the strategic partnership between GD Express and Singapore Post would enable both companies to leverage on each other’s resources to expand in the Asean region.
“We see this as a win-win situation. We are coming closer to our dream of building an Asean network as Singapore Post already has working relationships with other players in the region,” Teong told The Edge Financial Daily in a phone interview.
Teong also noted that apart from Singapore Post, GD Express also had partnerships with other international logistics players such as Federal Express (FedEx).
Singapore Post, as a strategic investor, will have no management control in GD Express but will nominate Ng to GD Express’ board as a non-executive director, he said.
When asked, Teong said there was no indication or shareholders’ agreement on whether the Singapore Exchange Main Board-listed postal operator would further increase its stake in GD Express. According to GD Express’ website, the company has a network of 53 branches, two affiliate stations and 41 agents throughout east and Peninsular Malaysia.
GD Express is currently focused on its Malaysian and Singapore operations but is open to working with partners in the region, Teong said.
He added that GD Express had one branch in Singapore, which recently underwent a capacity upgrade, and would only look at opening more branches in the longer term as its business expands.
On rising operating costs, Teong said GD Express’ strategy was to have more automated processes to mitigate the rising fuel costs without having to pass on too much of the cost increases to customers. Teong added that GD Express had benefited from the changing distribution models of many Malaysian businesses which resulted in more enterprises delivering products directly to customers.
“Our customers are spread across the various sectors of the economy, so there is no over-reliance on one particular sector. So even if the economy slows down, the impact will be softer,” he said.
In its second quarter ended Dec 31, 2010 (2QFY10), GD Express’ net profit rose 28.57% to RM1.62 million from RM1.26 million, driven by higher demand for logistics services from the continued improvement in the Malaysian economy.
The results came on the back of a 15.4% revenue growth to RM23.33 million from RM20.22 million a year ago. For the six months to Dec 31, GD Express’ net profit rose 21.7% to RM2.86 million, or 1.1 sen per share, from RM2.35 million while revenue grew 11.76% to RM44.66 million from RM39.96 million a year ago. Net assets per share stood at 17 sen.
GD Express shares yesterday gained 5.5 sen to end at 87.5 sen with 764,900 shares traded.
In a separate announcement, GD Express said that it was not in compliance with the public shareholding spread requirement of the Ace Market listing rules.
The public shareholding spread of GDEX as at March 15, 2011 has dropped to 23.76%.
The board of the company said it would take action to discuss with the substantial shareholders and its advisers how to rectify its public shareholding spread to comply with the requirement. It added that it would apply to Bursa Malaysia for an extension of time of six months from March 15 to facilitate the implementation of the rectification measures.
The company also saw the resignation of non-independent and non-executive director Lau while Ng was appointed non-independent and non-executive director of GD Express.