KUALA LUMPUR (Aug 1): KGW Group Bhd is developing e-commerce solutions to help Malaysian businesses expand their presence worldwide, with a focus on markets in the US.

The e-commerce solutions, which are part of its business strategy outlined in its prospectus, is expected to complement its core business of providing logistics services, said managing director Datuk Roger Wong in a virtual press conference on Tuesday (Aug 1).

“By helping Malaysian businesses establish an e-commerce channel, we will be able to facilitate their cross-border trade activities and create additional opportunities for us to provide services at the same time as well,” he added.

Wong spoke after the group debuted on the ACE Market of Bursa Malaysia with an opening price of 23 sen, a premium of 9.52% from its initial public offering (IPO) price of 21 sen.

At the time of writing, its share price had risen by 2.5 sen or 11.90% to 23.5 sen, with a trading volume of 126.26 million shares.

Its market capitalisation was RM113.46 million, based on an enlarged share capital of 482.8 million shares.

Established in 2005, KGW is a non-vessel operating common carrier (NVOCC) that provides end-to-end freight services mainly for Malaysian exports to the US.

An NVOCC is asset-light, as it typically performs all the services of a vessel operating a common carrier but does not own the vessels. Some 71.8% of its revenue comes from export services to the US.

Through its subsidiaries, it is principally involved in the provision of logistics services, including ocean freight services, air freight services and freight forwarding services, as well as warehousing and distribution of healthcare-related products and devices.

KGW also undertakes imports and exports via ocean freight and air freight services to Asia and Europe, which account for 10.58% and 8.8% of its revenue.

According to its prospectus, its e-commerce services will include store setup for customers on various online marketplaces, consultancy, store management, and logistics services to ship their products to overseas buyers.

KGW also noted in its prospectus that with its track record in providing logistics services between Malaysia and the US, it will be able to provide Malaysian businesses with warehousing solutions in the US, as well as provide ocean or air freight services to deliver their products to warehouses, or directly to buyers in the US.

It also intends to hire experienced personnel with relevant expertise to spearhead its e-commerce solutions business, and a business development manager by the third quarter of 2023.

“We expect the total staff costs for these two personnel to amount to [approximately] RM330,000 per annum, and we intend to fund them via internally generated funds of our group,” said KWG in its prospectus.

The company said it plans to offer e-commerce solutions by the second half of 2023.

KGW raised RM16.73 million from its IPO, with 59.78% or RM10 million earmarked to repay bank borrowings, while 11.95% (RM2 million) was for the renovation of a new operational site in Glenmarie, Shah Alam.

Other utilisation of its proceeds include 23.91% (RM4 million) allocated for listing expenses, and 4.36% (RM730,000) for working capital.

In terms of finances, KGW recorded a 3.66% growth in profit after tax (PAT) in FY2022 to RM16.34 million, from RM15.76 million, as revenue rose 17.54% to RM229.67 million, from RM195.42 million in FY2021.

However, in 1QFY2023, group PAT stood at RM1.28 million, from RM7.56 million, as revenue fell 77% to RM18.04 million, from RM80.97 million in 1QFY2022.

TA Securities Holdings Bhd is the principal adviser, sponsor, underwriter and placement agent for this IPO.

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