SG BULOH (Aug 6): PTT Synergy Bhd (KL:PTT) has forayed into the smart warehouse business with the launch of PTT Logistics Hub 1, a key move under its strategy to diversify earnings and reduce dependence on the construction sector.

The group is eyeing achieving an even one-third earnings contribution from its three key business segments — construction, real estate, and robotics — between the financial year ending June 30, 2029 (FY2029), and FY2030.

PTT Synergy group managing director Teo Swee Phin said the diversification is driven by the volatility in the construction industry as well as the rising cost impact.

“Construction is very volatile — sometimes it’s good, sometimes not, and then costs increase,” he said at the opening of PTT Logistics Hub 1 at Elmina Business Park on Wednesday.

“[In contrast] real estate is more stable because we only build based on tenant demand, not speculatively. And our robotic leasing model will generate recurring income. It’s very, very sustainable … So this is where we make ourselves more sustainable in the sense … So we are not too dependent on the constructions [business],” Teo said.

PTT Logistics Hub 1 marks the group’s first purpose-built smart warehouse. The facility is designed to support next-generation intralogistics demands. The facility integrates automated storage and retrieval systems (ASRS), AI-driven inventory management, and energy-efficient infrastructure.

PTT Logistics Hub 1 was developed under a sale-and-leaseback structure. The property was sold to CapitaLand Malaysia Trust (KL:CLMT) for RM180 million and leased back to the group’s subsidiary, Projek Tetap Teguh Sdn Bhd, under a 10-year lease.

On the rental income front, the group subleases the facility to tenants.

“We pay them [CLMT] rent. We collect another rent [from tenants], so there’s a difference in profitability,” said its chief executive officer Dan Then Ikh Choo, adding that the group has started collecting rental income from PTT Logistics Hub 1 from July.

According to him, PTT Synergy’s smart warehouse business generates income through three key revenue streams: development profits from constructing and delivering built-to-suit facilities; equipment leasing for robotics and automation systems; and rental income from leasing the completed warehouse to tenants.

“So we have three segregations of the income that are continuously improving our financial standing,” he added.

Looking forward, the group has planned a commercial warehouse opposite PTT Logistics Hub 1 with a capacity of 60,000 pallets. The group also has an ongoing warehouse project in Penang, which will cater for the semiconductor sector. The construction for the warehouse is slated for completion in March next year.

Managing director Teo said the group is hopeful of a strong financial performance for FY2026, underpinned by the commencement of rental income from its PTT Logistics Hub 1 and a growing pipeline of smart warehouses.

“Definitely better. I would say that [earnings] will increase by at least two times. Hopefully, we can achieve three times,” Teo said.

For the nine months ended March 31, 2025, PTT Synergy reported a net profit increase of 56% to RM13.1 million, from RM8.4 million a year ago, while revenue was steady at RM195.42 million versus RM196.47 million.

The construction segment remained the group’s primary earnings driver, contributing a pre-tax profit of RM13.68 million -- but was down by 38% from RM22.19 million a year ago.

PTT Synergy shares closed down three sen or 2.04% at RM1.44, giving the group a market capitalisation of RM622 million.

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