GDEX Diversifies into IT Services to Recover Losses from Express Delivery Business

GDEX, a Malaysian express delivery firm, plans to diversify into IT services to offset losses from its core business due to high competition. The company has acquired stakes in 3 IT firms and aims for the IT segment to contribute 25% of net profit.

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Mazhar Abbas
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GDEX Diversifies into IT Services to Recover Losses from Express Delivery Business

GDEX Diversifies into IT Services to Recover Losses from Express Delivery Business

GDEX Bhd, a Malaysian express delivery company, is proposing to diversify its business activities to include information technology (IT) services and solutions. The company's core express delivery business has consistently accounted for over 85% of its total revenue in the past three years, but it has recently been in a loss-making position due to high competition from foreign courier companies.

To turn around the business, GDEX launched the GDEX 2.0 transformation plan in 2022, aiming to leverage technology to deliver a better customer experience and expand its service offerings in the IT sector. As part of this strategy, GDEX has acquired equity stakes in three IT companies: Web Bytes Sdn Bhd, Sweetmag Solutions (M) Sdn Bhd, and Anon Security Sdn Bhd.

In the financial year ended Dec 31, 2023, the IT segment contributed 8.4% of the group's total revenue, but reported a net loss of RM1 million due to higher staff costs. However, GDEX anticipates that the IT segment, which it says is positioned for long-term growth, will turn around and contribute to 25% or more of the group's net profit in the future.

The company believes that the IT industry, which has seen strong growth since the pandemic and is projected to contribute a significant portion to Malaysia's gross domestic product, presents an opportunity for GDEX to diversify and improve its financial performance. The government's push for digital transformation in Malaysia is also expected to boost growth in the IT sector.

Why this matters: The diversification into IT services and solutions is a significant move for GDEX as it seeks to recover losses from its struggling express delivery business. The company's transformation plan and acquisition of IT companies highlight the growing importance of technology in the logistics industry and the potential for new revenue streams in the IT sector.

GDEX plans to continue to pursue additional ventures, such as investments, acquisitions, and strategic collaborations with other potential IT companies, to enhance the prospects of the IT services and solutions business. However, the group's core express delivery business was impacted by high competition from foreign courier companies and 'delivery masking', leading to a doubling of its net loss to RM34.8 million in the financial year.

Key Takeaways

  • GDEX plans to diversify into IT services and solutions to turn around its business
  • GDEX acquired stakes in 3 IT companies as part of its GDEX 2.0 transformation plan
  • IT segment contributed 8.4% of GDEX's revenue in FY2023 but reported a net loss
  • GDEX expects IT segment to contribute 25% or more of its net profit in the future
  • GDEX's core express delivery business was impacted by high competition and 'delivery masking'