This article first appeared in The Edge Financial Daily, on December 2, 2015.

KUALA LUMPUR: MMC Corp Bhd entered into a shareholders’ agreement yesterday with Keretapi Tanah Melayu Bhd (KTMB) to form a joint venture to undertake the business of rail freight transport and related businesses in the rail cargo sector.

In a statement, MMC said the JV will be known as KTMB MMC Cargo Sdn Bhd, and KTMB will hold a 51% equity interest in the company, while the group itself will hold the remaining 49%.

MMC group managing director Datuk Seri Che Khalib Mohamed Noh said the incorporation of KTMB MMC Cargo is timely “as it will increase the frequency of rail inter-terminal transfer (Rail ITT) among ports owned by MMC”.

“It is expected that KTMB MMC Cargo will provide an efficient and reliable Rail ITT service, where the said service will be synchronised with the arrival and departures of vessels at the relevant ports,” he said.

MMC currently has a presence in the transportation segment under its port and logistics (P&L) division through ownership or stakes in the Port of Tanjung Pelepas Sdn Bhd, Johor Port Bhd, Northport (M) Bhd and Senai Airport Terminal Services Sdn Bhd.

Thus, MMC said KTMB MMC Cargo’s presence in the rail cargo sector will complement the transportation chain under its P&L division.

“The formation of KTMB MMC Cargo will provide the necessary synergy impetus to the JV as both KTMB and MMC will be able to leverage each other’s strength to increase market share in the logistic sector,” said KTMB president Lt Kol (R) Sarbini Tijian.

“The JV will also have access to KTMB’s rail network connecting to major seaports in Peninsular Malaysia, such as Port Klang and Penang Port, and other seaports owned and operated by the MMC group. KTMB MMC Cargo will also be able to utilise technical and operational knowledge, and know-how from KTMB and MMC,” he added.

MMC (fundamental: 0.95; valuation: 2.4) closed four sen or 1.96% lower at RM2 yesterday, with a market capitalisation of RM6.21 billion.

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.