Logistics company GDEX Bhd is diversifying into the information technology (IT) services and solutions sector, responding to challenges in its core express delivery business.
Over the past three years, the company heavily relied on its express delivery business, which constituted over 85% of total revenue.
However, recent losses prompted GDEX to initiate the GDEX 2.0 transformation plan in 2022.
The primary goal of this transformation is to harness technology for enhanced customer experiences and to broaden service offerings in the IT sector, catering to a diverse range of clients from small-sized companies to large multinationals.
GDEX foresees the IT sector contributing 25% or more of the group's net profits and assets going forward.
Key to this diversification strategy are the acquisitions of equity stakes in three reputable IT companies: Web Bytes Sdn Bhd, Sweetmag Solutions (M) Sdn Bhd, and Anon Security Sdn Bhd.
These firms specialise in various aspects of IT services, including business software solutions, web design, and cybersecurity.
In the latest financial year ending 2023, the IT services and solutions business reported revenue of RM33.4 million, with a loss after tax (LAT) of RM1.0 million.
These losses were primarily attributed to increased staff costs incurred as the IT subsidiaries expanded their human capital resources to support operational needs and facilitate growth.
Despite these initial setbacks, GDEX anticipates a turnaround as it scales up its services and operations.
The company is confident that this diversification will not only enhance income streams but also improve long-term prospects.
Pending shareholder approval, the diversification is projected to be completed by the second quarter of 2024, withUOB Kay Hian Securities (M) Sdn Bhd serving as the advisor.