Hubline sees its tugs and barges staying highly utilised

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KUCHING: Hubline Bhd expects its operating tugs and barges involved in dry bulk shipping to remain highly utilised.

The Sarawak-based shipping firm anticipates that demand for operating tugs and barges would continue into the foreseeable future based on its observation of the barge logistics industry in South East Asia region.

“Freight rates in general are expected to improve in the foreseeable future,” said Hubline, which issued its 2018 annual report on Jan 31 ahead of the company’s AGM on March 6.

 ” We are optimistic about the potential for the aviation business to enhance Hubline’s existing business prospects.” – Hubline

The group currently owns a fleet of 23 tugs and barges. Hubline is in the midst of acquiring two more tugs and barges for the dry bulk business.

“The additional tugs and barges to be acquired will have the capacity of 10,000 to 12,000 metric tonnes each as compared to the existing tugs and barges that have a capacity of between 8,000 to 10,000 metric tonnes each.

“This will enable the group to increase their operation in the provision of tugs and barges’ services and consequently contribute to earnings growth.

“Our barge logistics business performed relatively well. Our shipment comprised of coal, gypsum, palm kernel shells, scrap metal, sand and aggregates, with coal representing the most significant contributor to total sales for the year under review,” said
Hubline.

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Group revenue for financial year ended Sept 30, 2018 (FY2018) rose to RM101.98 million, which was higher than RM94.08 million recorded a year ago.

Hubline said the higher revenue was due to additional shipments during the year via voyage charters as well as improvements in freight rates since last year.

For FY2018, the dry bulk business contributed RM10.29 million in pre-tax profit. However, after taking into account general administrative expenses of the holding company as well as RM6.18 million in finance charges, the group made an overall after-tax loss of RM4.53
million.

Group borrowings were reduced significantly by RM31.58 million to RM94.55 million from RM126.13 million in FY2017.

Hubline said the business routes operated by the group are flexible and could be varied in accordance with market demand as each voyage caters to a single client per shipment.

“We are able to streamline costs and maximise profitability by optimising our routing and scheduling of cargo which then allow us to achieve high level of vessel utilisation whilst still successfully gaining and maintaining market
share.

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“Our clientele covered North-South trade routes from Indonesia to Thailand, Cambodia, Vietnam, Philippines and return as well as trade routes which covered East-West from Thailand to Vietnam, Philippines and return.

“We are currently focusing our efforts on Vietnam and Philippines,” it added.

According to Hubline, Vietnam has recently opened up to allow the importation of coal, which would drive imports from Indonesia. In the past, such coal was sourced from northern
Vietnam.

On the Philippines, the company said, the country was currently enjoying strong economic growth and strong imports, thus increasing Hubline’s growth prospects over time in cargo
transportation.

From dry bulk shipping, Hubline is diversifying into the aviation business following the agreement it signed one month ago to acquire 51 per cent of Layang Layang Aerospace Sdn Bhd via a buy-out of existing shares from two shareholders.

Hubline will pay RM14.2 million for the proposed deal.

Layang Layang group owns a fleet of seven helicopters and four fixed wing aircraft. Besides, the group has chartered in a further six helicopters and one aircraft which it manages on a full-time basis, bringing the total number of helicopter and aircraft under its management to 13 and five respectively.

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“We are optimistic about the potential for the aviation business to enhance Hubline’s existing business prospects. With the acquisition, we expect to diversify our revenue base and increase profitability in the future,” said the company.

Layang Layang Aerospace owns 80 per cent of Layang Layang Flying Academy Sdn Bhd (LLFA). These companies are in the business of aircraft chartering, transportation of cargo, aircraft maintenance services and pilot training for both helicopter and aircraft.

LLFA is currently the only academy in Malaysia that caters for both helicopter and airplane pilot
training.

On Jan 7, 2019, LLFA officially opened its Ipoh training school, with the intake of 20 applicants for pilot training.

“This training school, together with the other LLFA training schools located in Kota Kinabalu and Kuala Penyu are showing great potential with frequent inquiries for applications.”

Layang Layang Aerospace’s other potential expansion plans, said Hubline, include the extension of the current contracts under the flying doctor service and emergency medical services in Sabah and Sarawak.

Others are participation in the oil and gas sector as well as in the tourism sector.

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