Senheng’s Strategic Acquisition: Strengthening Supply Chain and Customer Experience

Senheng’s Strategic Acquisition: Strengthening Supply Chain and Customer Experience

Senheng’s Central Distribution Center Acquisition

Senheng New Retail Bhd, a prominent Malaysian retail company, has recently unveiled plans to acquire a central distribution center (CDC) in Klang, Selangor. The deal, valued at RM75.8mil ($18 million), includes the purchase of a piece of freehold industrial land along with a single-story warehouse and a three-story office space. The CDC has been rented by Senheng since 2020 and it plays a pivotal role in the company’s supply chain management and customer service enhancement.

The acquisition brings prospects of significant annual gross rental savings for the group, estimated at RM4.2mil. This move is seen as an important part of Senheng’s omnichannel shopping experience strategy, optimizing logistics, and enhancing customer experience. Furthermore, the acquisition would strengthen the operational reliability of the company and support its ongoing Territory Champion store expansion and upgrade strategy.

The Significance of the CDC to Senheng

Built and previously rented by SDM since 2020, the CDC is integral to Senheng’s operations. It plays a crucial role in the company’s supply chain management, customer service enhancement, and logistics optimization. The CDC allows the company to serve both online and offline customers throughout Malaysia, ensuring timely product delivery and a wide range of offerings in physical stores.

By acquiring the CDC, Senheng aims to elevate its services and expand its reach. It is a move that aligns with the company’s vision of optimizing its omnichannel customer experience and streamlining its logistical operations.

Financing the Acquisition

To finance the acquisition, Senheng plans to borrow RM45.8mil from the bank and reallocate RM30mil from its initial public offering (IPO) proceeds originally intended for its Territory Champion expansion strategy. The acquisition process is expected to be completed in the fourth quarter of 2023.

As of June 30, Senheng had an unutilized allocation of RM117.7mil from its IPO proceeds for its Territory Champion strategy. After reallocating the RM30mil initially meant for store acquisitions, the unutilized allocation will be adjusted to RM87.7mil.

Conclusion

The acquisition of the CDC is a strategic move by Senheng, aiming to streamline its operations and enhance its customer experience. It not only allows for significant annual gross rental savings but also fortifies the company’s omnichannel shopping experience and supports its Territory Champion strategy. The acquisition is a testament to Senheng’s commitment to improving its operational reliability and enhancing its customer service.