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Business Times - FMH Buys 25pc Stake In YKP-FM Global

BackNov 02, 2012

KUALA LUMPUR: Freight Management Holdings Bhd (FMH) today announced that it has entered into anagreement to subscribe for a 25 per cent equity interest in YKP-FM Global Shipyard Co, Ltd.

YKP-FM is a private limited company incorporated in Thailand and based in Trang Province. FMH’sinvestment in YKP-FM will amount to Thai Baht 25.0 million, or about RM2.5 million, which will be paid for in cash. "We are very excited with the prospects of YKP-FM, as it will cater to an under-served market withstrong growth potential," said FMH Group Managing Director Chew Chong Keat in a statement here.

"We believe there is currently a disequilibrium in the supply of ship repair and maintenance capacity anddemand for such services in the ASEAN region.

"YKP-FM, with its strategic partners and ideal location in Southern Thailand, is well-positioned to capturemultiple markets in the region, including Thailand, Malaysia, Singapore, Indonesia and Myanmar," he said.The other shareholders in YKP-FM are Thai investors with a combined equity interest of 70 per cent, andanother Malaysian investor with a five per cent stake.

YKP-FM’s core business is the development and operation of a shipyard, which will focus on the repair andmaintenance of vessels such as tugboats and barges.

YKP-FM has identified strategic land in Kantang in Trang Province suitable for the development of a shiprepair yard, and will construct a modern, dedicated facility with a planned capacity to handle up to 10 vessels concurrently.

FMH said industry sources indicated that there are more than 5,000 sets of tugboats and barges in ASEAN,with an estimated 1,500 sets plying the Straits of Melaka route. As such, there is potentially a very sizeablenumber of vessels that would require the services of YKP-FM’s modern repair and maintenance yard. Additionally, YKP-FM will have the advantage of a large land bank to site the yard, which is not only geographically conducive, but can be acquired at a relatively low cost compared to Malaysia and Singapore.

"Our investment in YKP-FM represents a strategic move to further strengthen our logistics-related businesses.In particular, it is synergistic to our tug and barge operations under our 51 per cent-owned subsidiary, TCH Marine Pte Ltd, which has existing business activities in Kantang.

"We have the necessary experience and expertise, and are confident that we will be able to contributesignificantly to the growth of YKP-FM.

"Furthermore, our Thai partners bring with them the requisite local know-how, whilst another Malaysian partner, which is already involved in the ship repair and maintenance business, will provide important technical and operational expertise," Chew added. -- BERNAMA