AGX GROUP BERHAD
Business Overview
The company was incorporated in Malaysia under the Act on 26 November 2019 as a public limited company under the name of AGX Group Berhad. The group was established in 2004 with the incorporation of AGX Malaysia in Malaysia and commenced business operations in 2005.
AGX Group is primarily a third-party logistics (3PL) service provider offering sea and air freight forwarding, aerospace logistics, warehousing and other 3PL, and road freight transportation services. The Group’s position in the logistics industry value chain is depicted as follow (see picture 1)

Its business activities can be segmented as follow:
• Sea and air freight forwarding services – organising the transportation of cargo for its customers, starting from the point of origin and ending when the freight is delivered to its final destination, mainly based on scheduled routes by common carriers. It also commonly incorporates road and freight transportation, and in some cases also warehousing services in this service offering. AGX Group does not own the ships or aircrafts used to transport the cargo.
- Countries served: Malaysia, the Philippines, Korea, Myanmar and Singapore where it as a physical presence

• Aerospace logistics services – organising air freight for aircraft parts, components and equipment on project basis and carries out as and when required. In many situations, it carries out time-critical aerospace logistics services to bring crucial aircraft items from suppliers or vendors’ facilities in various parts of the world, to where the malfunctioning aircraft-on-ground (AOG) is located to facilitate its repair.
- Countries served: Malaysia, the Philippines and Singapore

• Warehousing and other 3PL services – warehousing for general goods at its leased warehouse, and other 3PL services such as the provision of domestic distribution management and e-fulfilment services.
- Countries served: Malaysia, the Philippines, Myanmar, Singapore

• Road freight transportation services – transportation of freight (carriage of general goods) from one point to another by road. It is a standalone service as well as to support other business activities. It owns and leases vehicles such as prime movers, trailers and trucks in Malaysia, Myanmar and Singapore. In The Philippines, the vehicles owned and leased are used to support its sea and air freight forwarding, aerospace logistics, and warehousing and other 3PL services.
- Countries served: Malaysia, Myanmar and Singapore

Use of Proceed (RM33.78 million from new issue)(See Picture 2)
• Business expansion – setting up new warehouses and offices in Malaysia and South Korea - 25.8% (within 12 months)
- In line with the business strategies and plans as set out, the company intends to allocate proceeds of RM8.70 million to expand its presence in Malaysia and South Korea by establishing new warehouses and offices (See picture 3)

• Repayment of bank borrowings - 12.2% (within 3 months)
- The company’s total borrowings amounted to approximately RM12.32 million, which include hire purchases, term loans, overdraft facilities and revolving credit granted by financial institutions. The company intends to settle part of its borrowings in the following manner (See picture 4)
- There are no covenants attached to the facilities above which may have a material impact on the repayment of bank borrowings and the repayment of bank borrowings is not expected to result in any early repayment penalties arising therefrom.
- Based on the pro forma consolidated statement of financial position as at 31 August 2023, the repayment of bank borrowings is expected to reduce the gearing level of the Group from 0.21 times (pro forma after Public Issue) to 0.17 times.

• Working capital – marketing expenses, upgrading of IT infrastructure, and operating and administrative expenses - 48.7% (within 24 months)
- The group’s working capital requirement is expected to increase in tandem with the business expansion in the establishment of the New Warehouses and Offices. In this regard, the company intends to allocate the balance proceeds of RM16.44 million for working capital purposes (See picture 5)
- The freight charges amounted to approximately RM112.00 million for FYE 2022, which translates into an average monthly freight charges of approximately RM9.33 million. Assuming the entire proceeds allocated herein are utilised for freight charges only, the proceeds are able to fund freight charges of the Group for approximately 1.6 months.

• Estimated listing expenses – professional fees, fee to authorities, estimated underwriting, placement and brokerage fees, printing, advertisement, and other incidental charges relating to the Listing - 13.3% (within 3 months)

Financial Highlights
Summary of the Group’s key financial and operational highlights based on the Group’s historical audited consolidated financial information for the Financial Years and Period Under Review (See Picture 6)
• The revenue increased from RM 122.5 million in FYE 2020 to RM 234.4 million in FYE 2022 (See picture 7). This indicates that the company is expanding its market share within the industry.
• The gross profit margin declined from 28.78% in FYE 2020 to 21.51% in FYE 2022. While GP margin increase from 21.5% in FYE 2022 to 32.6% in FYE 2023 (See picture 7). The increase in the GP margin was mainly due to the rising sea and air freight rates, and the reduction in the GP margin was part of management’s commercial decision to maintain relationships with customers given the rising sea/air freight costs in the industry. (Generally, a GP margin of 20% is considered high/ good).
• The PAT margin increased from 0.46% in FYE 2020 to 5.78% in FYE 2022. The significant increase in PAT margin indicates that the company has become more profitable over the period.
• The gearing ratio was 0.22 in FYE 2022. The company is within a healthy range for the gearing ratio, which also shows that the company will not be as prone to financial-related crises. (A good gearing ratio should be between 0.25 – 0.5).

Growth Strategies and Future Plans
1. Setting up a new warehouse and office at PTP in Johor Bahru to improve its coverage in the southern region of Peninsular Malaysia.
2. Setting up a new warehouse and office in Penang to improve its coverage in the northern region of peninsular Malaysia and establish a physical presence close to the seaports and airports in Penang.
3. Setting up a new office in Busan, South Korea to support its sea freight forwarding services for the import and export of cargos through the Port of Busan by facilitating its dealings with port and customs authorities.

Key Risk Factors
• Subject to regulatory requirements for its business operations. It requires approvals, licenses and permits from various governmental authorities in the countries it carries out its business operations, which are subject to, among others, various conditions imposed by authorities and periodic renewals.
• Risks related to fluctuation in sea and air freight rates wherein the global supply chain disruption prompted by the COVID-19 pandemic, combined with the US-China trade war has led to higher sea and air freight rates since 2020. The pricing of its sea freight forwarding services and for its air freight forwarding and aerospace logistics services are largely dependent on the prevailing sea freight rates and air freight rates respectively.
• Demand for its logistics services and its business volume may be adversely affected by an adverse development in the global economy arising from its dependency on the level of international trades of the countries where it carries out its business operations.
• Risk of adverse impact from outbreak of infectious disease which is similar to the COVID-19 pandemic.