Malaysia’s Largest Bulk Shipper to Diversify by Opening Grocery Stores
Earlier this year in an effort to gain better control of the movement of its merchandise and manage challenges in the shipping business, German food retailer Lidl announced that it was starting a shipping line called Tailwind Shipping Lines. Now in a sort of “turnabout is fair play” development, Malaysian Bulk Carriers Berhad, which describes itself as the largest dry bulk shipowner in Malaysia engaged in international shipping, reports it plans to diversify by forming a collaboration to enter the retail grocery business.
MBC, commonly referred to as Maybulk, reports it has been looking for new strategic business opportunities to diversify its revenue stream to mitigate the risks associated with the shipping business. The company currently owns two Kamsarmax dry bulk carriers and also operates on charter a Supramax and Handysize bulker. They are also involved in ship management and historically in tanker operations, although they are not currently operating tankers.
The past few years have been challenging for Maybulk as its fleet size decreased following the sale of older vessels. Management highlights that they currently derive their revenues from the provision of freight services for charter, which is of course subject to fluctuations in charter rates that are beyond their control. After being profitable in 2018, the company suffered two years of losses only returning to profitability in 2021 due to increased demand for commodities amid the global economic recovery.
“Following a strategic review of the group’s future direction, MBC intends to diversify its existing business to include the grocery business in view of amongst others, the favorable outlook of the grocery retail industry,” the company writes in a stock exchange filing.
To achieve the diversification, the company is proposing an initial three-year collaboration with Tunas Manja Sdn Bhd (TMSB), which manages grocery stores in Malaysia under the well-known TMG brand. MBC will appoint TMSB as a service provider for the supply and provision of products as well as using the company’s expertise to set up the stores. Maybulk will license the grocery store band names and will have the right to open stores in Kuala Lumpur and Putrajaya as well as parts of Malaysia.
Maybach plans to invest $12 million to open an initial 15 supermarkets and 15 express convenience stores in the next 12 months. They anticipate that the grocery business will contribute 25 percent or more of the net profits of the company in the future. As such under Malaysian law, MBC must obtain shareholder approval to proceed.
They expect to receive the shareholder approval and complete the collaboration agreement during the third quarter so that the 34-year-old bulk shipping company can diversify and launch its grocery store operation.