Integrated Logistics
Optimistic of Securing Deals
NEW STRAITS TIMES, TUESDAY, 12 JULY 2005
By: DALILA ABU BAKAR

Integrated Logistics Bhd (ILB) expects to secure two contracts by the end of this year, one in China and the other locally, chief executive officer Tee Tuan Sem said.

The bonded warehouse and logistics services company expects to sign soon a contract with IBM for new server services in Shenzhen, China. ILB is also optimistic of winning a new value-added supply chain solutions contract in Malaysia by year-end.

"The value of the (Shenzhen) contract is estimated at RM35million for two years, which is for warehouse rental, excluding other value-added services," Tee told Business Times when contacted.

On the domestic value-added supply chain solutions contract, Tee said ILB has bid for a sizable contract with a public listed local company. The outcome will be known by end of this year.

If ILB wins this project, it will be the first outsourced logistics services job in Malaysia by any company.

Research head of Avenue Securities Sdn Bhd Noor Azwa Mohd Noor said the local contract could enhance the stockbroker's 2006 earnings forecast for ILB by at least 10 per cent.

Avenue Securities has forecast a net profit of RM17.6 million on RM224.3 million turnover for ILB in 2005, followed by a net profit of RM24.8 million on RM253.9 million turnover in 2006.

ILB posted a net profit of RM14 million on a turnover of RM178.3 million for its financial year ended December 31, 2004.

Tee said ILB is also looking at listing its warehouses via a real estate investment trust, possibly starting with its 10 warehouses in Malaysia.

He said the warehouses have a total value of RM250 million, Eight of them are in Port Klang and Shah Alam and two in Johor.

Tee said ILB's four warehouses in China (three in Shenzhen and one in Shanghai) have a total value of RM200 million.

Avenue Securities has maintained its "outperform" call on ILB stock, suggesting a fair value 12-month target price of RM2.34.