PETALING JAYA: GD Express Carrier Bhd (GDex) is set to more than double its daily consignment handling capacity to 60,000 from 25,000 currently once its integrated hub management system (IHMS) runs at full steam.Its newly appointed chief executive officer Leong Chee Tong said the IHMS was recently completed with the addition of a conveyor belt system to sort parcels and documents and was now on a trial run. The GDex hub and its headquarters cover an area of 170,000 sq ft.
The IHMS, to be officially launched later this year, is the first of its kind among domestic courier service providers, and cost the company a total of RM19 million over the past eight years to put into place, including infrastructure, computer hardware and software programmes, he said.
He said the company could subsequently triple its capacity stemming from the acquisition of a plot of land adjacent to its premises four years ago. It was also expanding its 250-strong fleet with at least 30 new vehicles per annum, he said.
Leong said the company was positioning itself to take on more challenging businesses that required customised services for clients, in tandem with the changing business landscape.
“Organisations are outsourcing much of their operations, creating immense potential for sizeable ventures. For example, there are banks abroad that outsource their mailroom operations, and this is something we do not discount happening here,” he told The Edge Financial Daily in a recent interview.
Outgoing CEO Teong Teck Lean said competition within the courier industry was no longer limited to pricing as service providers grappled with rising costs and a tough operating environment.
Earlier this month, Teong, who has been widely credited with turning the company around, resigned as CEO to pave the way for Leong, his former deputy, to take over as part of the companyï¿½ï¿½s succession plan. Teong will remain as deputy executive chairman.
“We have differentiated the way we customise our services, taking into account customer needs vis-ï¿½ï¿½-vis market trends in order to establish our brand name,” Teong said.
He said the company had a 5% or RM60 million share of the RM1.2 billion domestic courier service market, with its domestic delivery service accounting for almost 98% of its revenue.
He said competition among local players was intense due to high fuel and operating costs, as well as a growing customer base with higher expectations.
“The industry will consolidate in the near future, companies will increase facilities and higher benchmarks will be set. As for us, we will look into new market opportunities and do not discount merger and acquisition activities to achieve that,” he said. GDex, he added, had already taken the over the courier businesses of two local players, including staff and assets.
On returns for shareholders, Teong said the company had set a profit target towards paying out dividends to its shareholders this year, emphasising that its primary aim now was to retain earnings to fund future growth.
“We are hoping that we meet our targets to able to pay out dividends this year, as we recognise that our shareholders have been patient for many years. At this juncture, however, we need to retain earnings in view of our rapid growth,” he said.
For the first quarter ended Sept 30, 2007 (1QFY08), the company posted a net profit RM778,000 on the back of revenue of RM15.9 million.
Teong said the companyï¿½ï¿½s gearing level was low, with ï¿½ï¿½decentï¿½ï¿½ cash flow given its business model. Total borrowings as at end 1QFY08 stood at RM6.92 million, while cash and cash equivalents totalled RM4.79 million.
On his appointment as CEO, Leong said his initial task was to identify a potential successor as he himself was groomed by Teong.
He said the company must be driven by established philosophies and practices to ensure sustainable growth.
“We have always believed in promotions within the organisation but if there are suitable candidates from outside who can fit into our operations, we will recruit them,” he added.