Hubline in good position to pursue new opportunities
KUALA LUMPUR: In spite of the challenges posed by the Covid-19 pandemic, Hubline Bhd (Hubline) is well-positioned to pursue new revenue accretive opportunities while strengthening the group’s position in established markets.
According to Hubline in its Annual Report for 2020, the financial year 2020 has been a challenging year.
“It was a year of two very different operating periods for the Group, with the unprecedented coronavirus pandemic (Covid-19) dominating the second half of the financial year ended September 30, 2020,” the group said.
“The markets which we operate in were not spared. Demands for certain logistics services were severely affected.
“Growing uncertainties regarding supply chain integrity, workforce restrictions, movement controls, social distancing, border closures and raw material pricing volatility all created a difficult and unpredictable business environment in the short term.”
However, the group remains focused on nurturing a responsible business model that delivers sustainable value creation for all stakeholders.
“The group is well-positioned to pursue new revenue accretive opportunities while strengthening the group’s position in established markets by investing in high quality long-term assets and a diversified mix to drive longterm profitable growth.”
“As we embark on a new financial year, we are cognisant of the continuing economic uncertainty in the markets which we serve and the inevitable headwinds that will flow through to our businesses.
“We have built strong foundations for the group in recent years by enhancing the business models and focusing on core services for our clients.”
Looking at the group’s barge logistics segment, Hubline encountered reduced shipments and freight rates, particularly in the June 2020 quarter in the midst of the first Covid-19 lockdown of several countries around South East Asia.
“That said, as we battle the effects of the global Covid19 pandemic on the economy, we have seen our number of shipments gradually return and improve as factories and businesses re-opened.
“Some of the most commonly transported commodities throughout the year under review were coal and palm kernel shells from Indonesia, as well as gypsum and aggregates from Thailand.
“Coal, palm kernel shells, gypsum and aggregates represented the four most significant contributors to total sales for the year under review.”
Some of Hubline’s major trade routes being undertaken during the year under review were coal from Indonesia to Vietnam, palm kernel shells from Indonesia to Thailand, gypsum from Thailand to Indonesia, and aggregates from Thailand to Singapore.
According to the group, the routes being plied by the dry bulk shipping tugs and barges are flexible and can be varied in accordance with market demand as each voyage caters to a single client per shipment.
“As the routing is completely determined by charterer demand, we perform shipments to any jetty, port or anchorage area within Asean regions limited only by draft restrictions.
“We are able to streamline costs and maximise profitability by optimising our routing and scheduling of shipments which then allow us to achieve high level of fleet utilisation whilst still successfully gaining and maintaining market share.
“Our flexibility is particularly advantageous given that markets have been driven around ad-hoc changes due to Covid-19 pandemic environment.”
On vessel utilisation, Hubline noted that it was down materially during the year under review due to the
Covid-19 lockdowns, with the worst month of the year being June 2020 when the group only managed to complete minimal shipments.
“In general, freight rates have been trending downwards for the majority of the year. Furthermore, there was added pressure on freight rates due to general difficulties being experienced by South East Asia economies grappling with market excess issues, border controls and movement restrictions.”
That said, the group expects improvement in the next financial year as it hopes and looks forward to the relaxing of border controls and volume improvement post pandemic.
As for its aviation logistics segment, Hubline is pleased with the group’s 51 per cent investment in Layang Layang Aerospace.
“Since our initial investment on 15 May 2019, Layang Layang Aerospace has continued to meet our business expectations.
“Our main base is in Kota Kinabalu, Sabah, Malaysia. Our aviation operations cover Kuching, Miri and Sibu in Sarawak, Kota Kinabalu in Sabah, Ipoh in Perak and Subang in Selangor, Malaysia.”
At the time of writing (for the annual report), Hubline had preliminary plans to expand to Senai International Airport, Johor Bahru in the near future.
“The global Covid-19 pandemic has a devastating impact on global air transportation businesses. Fortunately, our medical evacuation (medivac), flying doctor services and emergency medical services which were considered as essential services to rural, secluded or inaccessible communities continued to operate throughout the Movement Control Order (MCO) period.
“Covid-19 effects have allowed our general aviation segment to increase our businesses via increase in charters for essential services.”
To note, Hubline was recently awarded a contract to provide aircraft and helicopters for the flying doctor service (FDS), medivac and other ancillary health services to the Sarawak State Department of Health for a duration of 48 months until the end of the year 2024.
Meanwhile, classes for the group’s Sabah-based Layang Layang Flying Academy, which is the only flying academy in Malaysia which is officially approved for training fixed wing and helicopter pilots, were briefly suspended during the MCO period.
However, classes for existing students recommenced in July 2020 and the academy’s quarterly new intake of students was re-instated in September 2020 by the government.
“Our flying academy is performing relatively satisfactorily given the global pandemic. We have continued to expand our student base by having three new cohorts of students during the financial year under review.
“Our academy enforces strict compliance with all relevant standard operating procedures issued by authorities including the need to maintain adequate social distancing.
“Our company will continue to seek for opportunities to expand beyond our existing markets in Sabah and Sarawak as we seek to establish a greater presence in West Malaysia.
“Moreover, our company will pursue a ground handling license from the Malaysian Aviation Commission (Mavcom) to handle aircrafts from other companies, regions or countries to complement our existing chartering and training services.”