One of Shin Yang's container feeder vessel, at the Northport wharf. File pic. KUCHING: Shin Yang Shipping Corp Bhd (Syscorp) is to acquire Melinau Transport Sdn Bhd (MTSB), a leading firm in bulk cargo transportation, to shore up its earnings. MTSB is involved in road freight carriage primarily servicing all major ports in Sarawak southern, central and northern regions covering Kuching, Sibu, Bintulu and Miri. The transport firm has expanded its physical asset base over the last 26 years and currently has a fleet of 282 prime movers, 566 trailers, 463 dump/cargo trucks, 51 forklifts and 11 cranes. Its serves some 150 active customers, according to Syscorp. Syscorp, on the other hand, operates a fleet of 240 vessels, including 14 container ships, with total gross registered tonnage of 376,500 tonnes. The group also operates chemical tankers, transporting crude palm oil (CPO) and methanol products, and its services cover Malaysian and international waters. Syscorp will pay RM43mil in cash to acquire the entire 10 million shares in MTSB from Shin Yang Holding Sdn Bhd under a conditional share sale and purchase agreement. The proposed deal is expected to be completed in the second quarter of 2021, Syscorp told Bursa Malaysia. Shin Yang Holding, which is Syscorp’s largest shareholder with a 56.54% stake, has diversified business interests. The conglomerate is involved in property development, oil palm plantation, tree plantation services, civil engineering, trading, public transportation, fuel bunkering and retailing, wooden product manufacturing, quarry operations, shipping as well as ship building. Syscorp said the proposed acquisition of MTSB will help it reduce “outsourcing costs” on land transport for inbound and outbound cargoes to and from Sibu, Miri, Bintulu, Kota Kinabalu and Kuching where MTSB primarily operates in. “It will enable Syscorp group to leverage on MTSB’s network and clientele base to cross-sell Syscorp group’s other shipping services, such as transportation, door-to-door services, custom clearing, import and export documentation as well as port-related services under a unified ‘Syscorp’ franchise. “It will also strengthen its shipping offerings by reducing the reliance on external land transport service provider and have better control over delivery routes as well as the reliability, timing and manner of cargoes delivery to hinterland, particularly in the course of servicing and tendering for multinational contracts involving the provision of logistics services. “Therefore, the proposed acquisition will establish Syscorp group’s internal land transport capability and is a step forward towards positioning it as an integrated shipping service provider which provides seamless shipping and transport solutions to its customers, ” it said. The group said its intention to buy MTSB is to shore up its earnings as the latter had been profitable in the last three financial years, and posted a revenue of RM52.8mil and after-tax profit of RM5.2mil in the financial year ended June 30,2020. “It is envisaged that MTSB will contribute positively to the financial performance and future profitability of Syscorp group.” On MTSB’s future prospects, Syscorp said the latter’s haulage activity remains relevant in the supply chain of Sarawak economy due to its decentralised nature, namely having route flexibility to deliver direct to sites, which in turn enables just-in-time delivery of perishable and essential goods such as agricultural products. “Coupled with the recent drop in diesel prices which has reduced the variable costs of haulage, the decentralised haulage industry in Sarawak is also in a relatively good position to quickly respond to Covid-19 related disruptions.” Syscorp said with Shin Yang Holding group as its captive clientele, MTSB’s future prospects is expected to be stable. “It is envisaged that MTSB will remain as vendor group’s (Shin Yang Holding) preferred land transport service provider in the forseeable future due to MTSB’s ability to capitalise on its familiarity with the vendor group’s operational requirements to efficiently service routes which are/were initially tailored exclusively for the vendor group’s operations such as quarry and timber segments. “Hence, MTSB’s continued relationship with the vendor group is expected to give MTSB a competitive advantage in the land transport business in Sarawak and it will enable MTSB to leverage these routes to service other customers. “With the anticipation of the ongoing growth in the vendor group’s businesses and potential external customer base, the board (of directors) believes that the proposed acquisition represents a good opportunity to further strength the future income of Syscorp group, ” it added. Syscorp said the emergence of major manufacturing projects in Sarawak involving both local and foreign investors provide business opportunities for logistics companies. “Major investments in Sarawak’s transportation network are providing a substantial leap in capacity and capability, which should provide a strong base for the expected growth in the movement of goods and people in the coming years. “The development of the Samalaju Port in Bintulu and Tanjung Manis integrated port in Sibu will greatly improve the efficiency and export capabilities of Sarawak, particularly within the primary growth nodes, which in turn should give rise to lower logistics costs and encourage further development, ” it said. Supporting the growth in the movement of passengers and cargoes, Syscorp noted that the 2021 Sarawak Budget has allocated RM1.15bil for major infrastructure projects that focus on the development of the state’s coastal road network and RM1.69bil for the Regional Corridor Development Authority’s projects in Sarawak Corridor of Renewable Energy.
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