KUALA LUMPUR (June 25): Integrated logistics firm Tri-Mode System (M) Bhd is partnering with a Taiwanese logistics firm to expand its geographical footprint to Vietnam, where it sees high demand for international logistics services.

The ACE Market-listed company said in an exchange filing today it has entered into a joint venture (JV) agreement with Oriental Freight Services Co Ltd and Vietnamese investor Le Thi Thuy An today to set up the company in Ho Chi Minh City, Vietnam.

Oriental Freight, a unit under Taiwanese logistics services provider Oriental Logistics Group Ltd (OLC), is involved in the business of providing ocean and air freight transportation forwarding, container haulage, and warehousing services.

Under the terms of agreement, Oriental Freight will be the JV company's largest shareholder with a 79% stake, followed by Tri-Mode at 20% and Le Thi Thuy An at 1%.

Accordingly, Tri-Mode is to make an initial contribution of US$80,000 (or approximately RM331.42 million) of the US$400,000 required, which it said will be funded through internally generated funds.

"The proposed JV is aimed to expand Tri-Mode's logistics business to Vietnam, where the potential of international trade transaction is growing tremendously and demand for international logistics services is high due to rapid economic growth of the country.

"Further, the proposed JV also represents an opportunity for Tri-Mode to expand its business coverage to other Southeast Asia countries. It is expected to add value to Tri-Mode via the expertise and wide coverage network of OLC Group in Asia countries," said the company.

It will also pave the way for future collaboration between Tri-Mode and OLC Group overseas, Tri-Mode added.

Barring unforeseen circumstances, Tri-Mode said the proposed JV, which is not subject to shareholders' approval, is expected to be completed by July 15.

Shares in Tri-Mode closed one sen or 2.63% higher at 39 sen today.

The stock has lost about 36% of its value since its initial public offering exercise with an issue price of 61 sen in May 2018. Tri-Mode currently has a market capitalisation of RM64.74 million.

In its financial year ended Dec 31, 2018, Tri-Mode's operations in Malaysia accounted for 93% of its revenue, while the remainder is derived from its overseas operations in Asia, Australia, Europe and others.