With fresh funding mobilised from the Stock Exchange of Thailand, Asia Network International Plc (ANI) aims to expand its network of cargo general sales agents (GSAs) across Asia and beyond, partly through mergers and acquisitions.
Trading of ANI, which services more than 20 reputable airlines in eight countries and special administrative regions across Southeast Asia, debuted on the Stock Exchange of Thailand (SET) on Dec 14, with up to 30% of its shares offered to the public at 5.25 baht apiece.
Proceeds estimated at 2.9 billion baht will be allocated to restructure the company's financial blueprint, particularly the acquisition of GSA businesses in Singapore and Malaysia, which were acquired towards the end of 2022, said chief executive Koh Bee Leng.
These funds will also be used as working capital to facilitate ongoing operations and future growth prospects for the company, she said.
"We will continue to expand our network of GSA services in Asia to strengthen our leading position, eventually covering other regions," Ms Koh told the Bangkok Post.
For short-term strategies, ANI wants to expand into high export volume countries in Asia such as Japan, South Korea and India. Long-term goals include expanding or establishing new GSA partnerships with industry players in other regions, such as Australia and Europe, she said.
"The company may consider expansion opportunities via mergers and acquisitions or joint ventures with GSA players or other companies in the air cargo value chain," said Ms Koh.
"We may also consider developing our own GSA products through potential partnerships."
Koh Bee Leng, chief executive of Asia Network International, sees Thailand as a significant opportunity for market expansion.
REGIONAL LEADER
ANI, its subsidiaries and 28 associates operate in Thailand, Singapore, Vietnam, Hong Kong, China, Malaysia, Cambodia and Myanmar, with coverage of more than 400 destinations worldwide.
ANI enters into agreements to act as the exclusive GSA for each route and operates through marketing and sales of air cargo for outbound flights from the country of the engaged airline to the final destination.
In addition, it provides services to ground handling operators at Changi airport in Singapore.
She said ANI is among the top three GSA operators in the region and the market leader in Thailand.
The top three market leaders hold a combined market share of between 65% and 75%. This market dominance highlights ANI's prominence in the GSA sector, with limited competition from other industry players, said Ms Koh.
"As a leading regional GSA operator with an extensive network across Southeast Asia, Hong Kong and China, we have a strong relationship with world-class airlines, building up trust to be their GSA representative based on our standards and quality of service," she said.
ANI is a subsidiary of SET-listed Triple I Logistics, which is why it chose to list in Thailand.
"The decision to list on the SET was agreed upon by all involved parties, in addition to our corporate restructuring process," Ms Koh said.
"Thailand represents a significant opportunity for growth as the main logistics hub connecting the region with China, Japan, South Korea, India, Australia and other logistics hubs throughout the world."
STRONG PERFORMANCE
ANI's revenue grew from 4.84 billion baht in 2020 to 7.79 billion in 2021, but edged down to 7.74 billion last year.
The compound annual growth rate between 2020 and 2022 was 26.5%.
Service volume has risen from 91,097 tonnes in 2020 to 109,050 tonnes in 2022, an average growth rate of 7.5% per year, she said.
In the first nine months of 2023, ANI reported total revenue of 4.02 billion baht and net profit of 652 million, marking 8.6% growth in net profit year-on-year.
Last year Vietnam and Cambodia contributed 35% of total revenue, with 28.7% coming from Singapore and Malaysia, 20.9% from Hong Kong and China, and 14.5% from Thailand.
"Air freight is part of international logistics. An expected slowdown in the US, Europe and China may affect the demand for goods and services in those markets," said Ms Koh.
"However, with consumer behaviour focusing on speedy delivery, especially for e-commerce and electronic products, this may serve as a supplement to the demand for air transport."
She said ANI can provide seamless service to satisfy users and fulfil the needs of all parties, including airlines and freight forwarders.
The company has the capability to maintain profitability, even in uncertain market situations, said Ms Koh.
GROWTH DRIVERS
As the pandemic reduced passenger volume, airlines were forced to rely on other revenue streams, with cargo playing an important role during that period, she said.
Trade activity in Southeast Asia increased significantly from 2018-22 as production grew in the region, with Chinese companies relocating their manufacturing facilities to Asean because of rising operating costs on the mainland, in addition to higher consumption levels linked to rising income in Southeast Asia.
"Covid-19 brought about a shift in manufacturing outsourcing trends because of a raw material shortage created by dependence on China," said Ms Koh.
"In addition, labour costs increased manifold, stringent business practices came into play and compliance costs soared."
Based on these factors many international firms adopted the "China +1" strategy, with manufacturing activity picking up in Southeast Asia, she said.
"Airlines will increasingly rely on GSAs to optimise the sales of their cargo capacity," said Ms Koh.
"The rising cost of labour and a growing desire to focus on core businesses are key elements that have driven airlines to outsource."
GSAs can establish an airline's market presence in a country fast and effectively, she said.
They can leverage their vast network and local knowledge for fast expansion of an airline's business across many countries, said Ms Koh.
Because GSA companies can represent more than one airline concurrently with few staff members, they can be cost-effective, she said.
However, GSAs need to offer competitive rates to attract and retain customers, said Ms Koh. This requires a deep understanding of the market and the ability to adjust pricing strategies based on demand and competition, while managing the volatility of air freight rates, she said.
