Top logistics firm plans 80 service zones
By Hui Ching-hoo (China Daily)
Updated: 2006-02-16 07:21

HONG KONG: Nan Yue Logistics, a top logistics and expressway service firm in South China's Guangdong Province, is planning to build 80 expressway service zones in the next 15 years to cash in on a road construction boom in the province.

The move is believed to be part of the Hong Kong-listed firm's strategy of diversifying profit engines to supplement its staple business of construction material logistics.

The service zone business has registered double-digit growth lately, said Nan Yue Chairman Lu Maohao, so the company wants to develop it into a new profit source.

A total of 100 more service zones is expected to be established by 2020 in Guangdong, when, according to the provincial government's development blueprint, the province would add 5,000 kilometres of highways.

"I am confident we may win tender of 80 per cent of the expressway service zone projects," Lu said.

He added that the company's experience of participating in the construction of 3,000 kilometres of expressways would be its competitive edge.

"We pin high hopes on the service zone business, although it now only accounts for 5 per cent of the company's turnover," Lu said.

Nan Yue currently runs 30 to 40 expressway service zones in Guangdong that integrate a series of facilities such as convenience shops, fuel-filling stations and restaurants.

Nan Yue subcontracted the gas station operation of some of its service zones to Sinopec in January. Sinopec is a strategic partner of Nan Yue, holding a 5 per cent stake.

"We would like to subcontract convenience shop and restaurant businesses of the service zones by bidding or introducing strategic partners," said Lu.

Apart from service zones, Nan Yue is also eyeing the shuttle bus business.

The company intends to acquire other bus companies; it has already spent HK$136 million (US$17 million) of the money raised through its Hong Kong initial public offering in October on a 62 per cent stake of shuttle bus operator Guangdong-Hong Kong Motor.

"We don't rule out the possibility of further buying into other transportation companies," Lu said, adding that Nan Yue is now focused on consolidation of the newly acquired business.

He said the shuttle bus business between Hong Kong and Guangdong boasts high potential, as a rising number of mainlanders have been visiting Hong Kong since the opening of the Disneyland Theme Park.

(China Daily 02/16/2006 page10)