KUALA LUMPUR: Datuk Hew Han Seng saw the potential in the logistics sector even before the government mooted a plan to turn Port Klang into a national load centre and a regional hub port in 1993.

“Malaysia is an export-oriented country and the potential for it to grow as an emerging market is great, especially in the logistics industry. Back then, I saw the needs and importance of logistics due to globalisation and also the effectiveness of offering integrated logistics solutions under one roof,” he told The Edge Financial Daily in an interview.

Fast forward 26 years, the 51-year-old founder and group managing director of Tri-Mode System (M) Bhd is taking his company to list on Bursa Malaysia. His first stop is the ACE Market where Tri-Mode will make its debut on May 11.

Founded in 1992, Tri-Mode started its operations in Port Klang, providing full container load (FCL) and less-than-container load (LCL) shipments and freight forwarding services.

In 1996, it also started handling warehousing and container freight station operations. In 2006, it set up an air freight operation office at the Kuala Lumpur International Airport in Sepang to handle air transportation of cargo.

In 2009, it expanded its services to include the handling of container haulage and transportation for FCL deliveries via land to all destinations in Peninsular Malaysia, focusing primarily on the central region.

“Tri-Mode was named as such because it covers the three modes of transport — sea, land and air,” said Hew.

Today, Hew remains bullish about the logistics sector. “As long as Malaysia keeps growing, Tri-Mode will always be on the growth path. Logistics is the sector where if I got money, I will put the money into it [to invest],” he said.

“I would put logistics as a ‘forever green’, proven industry. We (Tri-Mode) are confident that investors would appreciate the progress and the strong fundamentals of the company,” he added.

The company is seeking to raise as much as RM26.36 million from its initial public offering (IPO), of which 58.8% of the proceeds will be allocated for its business expansion via the construction of a proposed headquarters (HQ) and distribution hub; purchase of prime movers and trailers, and 8.9% for working capital. A further 19% will be used to repay borrowings and the balance to defray estimated listing expenses.

The IPO exercise entails the issuance of 43.21 million new shares at 61 sen per share. The final retail price is subject to a book-building process.

On the timing of its listing, Hew said: “Whether it is a good [or bad] time to list on the ACE Market, I think there is no better timing because we believe that the logistics industry will continue to grow amid expectations of continued economic growth for 2018.”

The proposed HQ and distribution hub with a target built-up area of about 80,000 sq ft on the Pulau Indah land, Selangor, is to centralise the group’s operations and expand its warehousing capacity.

Tri-Mode also intends to buy an additional 10 prime movers and 50 trailers to support its container haulage business, where it currently operates a fleet of 99 prime movers and 505 trailers respectively. Tri-Mode also owns three side-loaders.

“Our offices right now are scattered [around Port Klang, North Port and West Port] and we operate in two yards — Yard 1 and Yard 2 in Pulau Indah. So, once the HQ and distribution hub are ready by 2020, we will move all our offices and container freight station operations there,” he said.

Upon listing, the group expects to increase its market capitalisation to RM101.3 million.

At last Friday’s closing price, Tri-Mode will trail behind its listed integrated logistics peers like Tasco Bhd (RM372 million), Freight Management Holdings Bhd (RM210.35 million), Century Logistics Holdings Bhd (RM289.76 million), Harbour-Link Group Bhd (RM280.28 million), Xin Hwa Holdings Bhd (RM241.92 million) and See Hup Consolidated Bhd (RM102.47 million) in market capitalisation. However, it will be ahead of Complete Logistic Services Bhd (RM83.54 million) and Transocean Holdings Bhd (RM25.42 million).

For its financial year ended Dec 31, 2017 (FY17), Tri-Mode’s net profit rose 28.5% to RM6 million from RM4.7 million in FY16, driven by higher sales orders from customers, lower depreciation expense for prime movers and trailers, lower direct labour cost for driver and fuel costs and lower administrative and finance cost.

Revenue rose 19.8% higher to RM85.5 million, from RM71.4 million in FY16.

Geographically, Tri-Mode’s operations in Malaysia account for 91.3% of its revenue, while the remaining 8.7% is derived from its overseas operations.

Sea freight is the main contributor to Tri-Mode’s revenue at 59%, followed by container haulage at 34.2%, airfreight (5.4%), warehousing (0.9%), freight forwarding (0.3%) and marine insurance (0.2%).

Hew is confident that the group will sustain its earnings growth momentum for FY18.

“We are confident going forward. Based on our past track record, we will maintain the growth momentum for this year,” he added.

As at Feb 28, its cash pile stood at RM3.26 million and total borrowings were at RM23.48 million.

Hew has a controlling 67.7% stake in Tri-Mode, while his wife Datin Sam Choi Lai owned a 27.4% stake. Post-listing, their shareholdings will be reduced to 50.1% and 20.3% respectively.