KUALA LUMPUR (March 22): Wah Seong Corp Bhd's indirect unit WDG Resources Sdn Bhd has expanded its exclusive distributorship for South Korea's Doosan Infracore Co Ltd construction equipment to East Malaysia, from only Peninsular Malaysia previously.

WDG today inked an exclusive distributorship agreement with Doosan for the 2019-2020 period.

Previously in 2017 and 2018, it was the exclusive distributor for Doosan machines for solely West Malaysia.

In the period, it managed to build a portfolio with a 10% share of the West Malaysian market representing 10% of the whole country's market share, said Wah Seong industrial trading and services division chief executive officer Goh Eng Hooi.

The Malaysian market is expected to see annual sales of 2,400 machineries by 2020 in the key product segments that Doosan is involved in. For the renewed agreement, WDG aims to capture around 10% of that market share.

"This marks our serious foray into East Malaysia, particularly for the infrastructure and construction segment," he said at the signing ceremony between Doosan and WDG here today.

"For the Sabah portion of the Pan-Borneo Highway, there are 12 packages left that we can focus on.

"In Sarawak, there is the coastal highway and the ongoing Pan-Borneo highway projects. There are also dams coming up as well [for opportunities]," added Goh.

Moving on, WDG will set up its branch network with main branches in Kuching and Kota Kinabalu before end-2019.

"But having said that we have a well-established track record [in East Malaysia], being involved in oil and gas projects [particularly] on pipelines from Kimanis to Bintulu previously," added Goh.

Doosan's key products in the segment include excavators, wheel loaders and articulated dump trucks, with average selling price of RM500,000.

It also provides after sales services, and intends to undertake rental services and sale of parts as well.

WDG, being Wah Seong's construction equipment distribution arm, currently contributes around 10% of Wah Seong group's bottom line.

On its unique selling proposition, Doosan produces efficient mechanical engines for its machinery, which are cheaper to maintain compared to its electronic counterparts currently used by most competitors. Doosan produces electronic engines as well.

For Doosan, by having a single entity as the exclusive distributor for both East and West Malaysia, it hopes to provide better after sales services for its end-customers.

There are instances when projects in East Malaysia are subcontracted to West Malaysia-based companies which have purchased Doosan products in Peninsular Malaysia.

They then send their equipment to East Malaysia, and had to deal with a different entity for parts and maintenance.

"WDG has a similar portfolio with the Doosan Group which is the oil and gas sector and heavy industries, this provides a good synergy for us to develop this market," said Doosan Group vice president of sales Chris Jeong.

"With a good customer relationship, we believe that we reach our goal of improving our market presence in Malaysia," said Jeong.

"In terms of growth, in just the last two years WDG has proven its capabilities in achieving a market share of 10% in West Malaysia.

"For us to see that significant growth, that is why we believe we can achieve more in East Malaysia as well," he said, adding that its previous exclusive distributor for East Malaysia will remain a key customer and continue to liaise closely with WDG moving forward.

At the noon market break, shares of Wah Seong were unchanged at 76.5 sen, giving it a market capitalisation of RM588.94 million.