It cannot be denied that Chiau Haw Choon, 34, is at the height of his career. He has been credited as the person who transformed and took listed Chin Hin Group Bhd to greater heights over the last nine years.
He has grown the company since taking over in 2009. He added another feather to his cap in June when he represented Malaysia at the EY World Entrepreneur of the Year Award 2017 in Monte Carlo. Chiau is, after all, known as the dropout who rose to become the CEO of a listed company.
But this year is proving to be a challenging one and will put his entrepreneurial skills to the test. Despite reporting a slightly higher revenue of RM265.3 mil for its 1QFY18 compared to RM261.6 mil previously, profit dived by nearly 50% from RM8.1 mil to RM4.2 mil. The drop was due to intense competition, a soft property market and tough environment for the construction sector. Chin Hin also incurred costs for new start-ups.
Not surprisingly, its share price slipped below the RM1 level and is hovering at around 81 sen, the price at which it was listed in March 2016.
But for Chiau, challenges are nothing new and he is confident of a better second half this year. “We think we will perform better in the second half of the year and that will lead to a better performance in the share price. There is always a direct relationship between share price and business performance,” he tells FocusM.
He says the factors pressuring the share price can be divided into those coming from outside and those caused by internal issues.
“Externally, there is the weak market sentiment post-general election and investors have a negative view on the construction sector which has affected the building materials sector. There has also been a slowdown in the property sector.”
As for internal factors, Chiau acknowledges that a key pressure on the counter is the company missing its profit target. “There were two reasons for missing the target. One was that we are starting a few businesses and incurred a lot of pre-opening expenses. The other reason is the losses from other businesses such as Metex Steel.”
Chiau points to its Starken AAC Sdn Bhd’s second plant as an example. He suggests that things will begin to look better once profits from these ventures start to be recognised. As for the loss-making units, Chin Hin is looking into how it can control costs to mitigate some of the losses.
A Chin Hin unit, G-Cast Concrete Sdn Bhd, recently inked a 10-year coal ash offtake agreement with Tanjung Bin Power Sdn Bhd.
G-Cast will collect the coal ash for the potential production of green concrete products.
“(The deal) is expected to have positive contribution to the earnings per share, net assets per share and gearing of the Chin Hin Group based on potential green product sales by G-Cast,” the management said in a filing with Bursa Malaysia.
While the company is looking to better times, it has indeed been a long journey for Chiau.
If someone had told him during his mid-teens that he would one day be representing Malaysia as the EY Entrepreneur of the Year 2017 in Monte Carlo, Monaco, he would have probably laughed it off.
However, the glitzy European city is exactly where he found himself in June, going up against EY entrepreneurs from around the world.
The big award was ultimately won by the contestant from Brazil, but simply being among the contenders is a testament to how far Chiau has come since his troubled younger years.
Chiau has transformed Chin Hin from an SME into what it is today. He focused on making the company an integrated building materials provider. “Usually, a building materials company will provide either bricks or roofing, but my vision was that Chin Hin would produce everything,” he says.
To enable this, Chin Hin started or acquired manufacturing companies which allowed it to produce the necessary materials needed to build a house. His moves started to show results and in 2011, Chin Hin reported an annual turnover of over RM1 bil. This cemented its position as a key player in the building materials sector.
Aside from traditional building materials, the company also moved into renewable energy through an investment in a solar engineering, procurement and construction (EPC) company in 2011.
The culmination of these efforts came in 2016, when Chiau took his transformed family enterprise public and listed it on the main market of Bursa Malaysia.
The first decade of Chiau’s life was spent in a small, quiet town in Kedah and was fairly uneventful. His family stayed on the second floor of his grandfather’s hardware shop, and his early introduction to the family business was watching his father go about running the show.
It was during this time that his father, Datuk Seri Chiau Beng Teik, began growing the business. He ventured into the trading of building materials and cement transportation, which later evolved into cement distribution.
As the business grew, the elder Chiau made the decision to move his family from the village to Alor Setar. For his young son, the experience of moving to a city was overwhelming.
He remembers being incredibly excited and attracted by life in the big city, but he also struggled as life was very different. Chiau, who studied in a Chinese primary school, could not speak any other language and he soon dropped out of school.
It was the start of a spiral that took him to some dark places. He remembers being out of control and said even his parents could not control him.
“During those years, I became a gangster and I was a rebellious kid. I have even been in the lockup for five days,” he says.
Given his lifestyle, it looked like Chiau was heading nowhere good. As that point, it would not have come as a surprise to many if he had ended up in jail or worse.
A mother’s love
Despite his disregard for his parent’s authority, Chiau’s mother never lost faith in her eldest child. He credits her love and determination to get him back on the right path as being key.
He was a school dropout at age 13 and from then to age 16, he did not attend secondary school. When he was 16, his mother finally convinced him to attend an intensive English course in Singapore. She was concerned that Chiau, who attended a Chinese medium primary school, had an extremely limited command of the English language.
Her son agreed to go but mostly because he had grown tired of Alor Setar. “I thought I would go there and spend a few months having fun and then come back,” he says.
Fate also played a part in his life as he soon discovered. He met an important mentor who would be instrumental in him changing his life forever. “Once I got there (to the learning centre) I met a tuition teacher, who shared the Gospel with me and took me to church. This led me to believe in Christ at age 16,” he reminisces.
This was the spark Chiau badly needed. He recalls comparing his life to those of his peers and realising what a mess it was. “At the age of 16, I had never seen someone worse off than me. I was at the lowest point of my life. I wanted to have a new life,” he says.
Realising he needed to get his life in order, Chiau knuckled down to finish the intensive English language class that year. The following year, he enrolled in secondary school in Singapore at the age of 17.
“I remember starting my first year of secondary school and I was already the oldest student in the entire school,” Chiau says, laughing. “It took me four years to finish secondary school as in Singapore there are the express and normal schools.”
After Singapore, Chiau left for Australia to pursue a Bachelor’s degree in Finance and Marketing at Deakin University. Upon completion, he returned to Malaysia a changed man, and ready to start a new chapter in his life.
A new challenge
A new challenge came quickly as he was needed to take the helm at the family business. His father was ill and he needed his eldest son’s help to run the company.
Determined to no longer shirk his duties to his family, Chiau jumped straight into it. At just 23, he joined as group managing director.
Chiau does not remember feeling overwhelmed by the magnitude of the challenge because it was a much smaller company then with 70 employees, compared to over 1,000 today.
His father had managed to grow the business to a small and medium enterprise, but Chiau knew that Chin Hin needed to diversify its offerings to stay relevant. So, he decided to grow the company into a one-stop building materials player, with the aim of supplying contractors and other hardware shops.
Despite hitting milestones, competition and subdued sentiment in the construction and property industries ensured that Chiau has his hands full in keeping Chin Hin on track to achieving sustainable revenue and profit growth.
He believes Chin Hin’s future prospects lie in its ability to capitalise on its innovative building materials solutions and construction methods. They include its Starken AAC business which produces AAC products which are lighter than regular concrete and seen as a substitute for cement or clay bricks.
Chin Hin will also focus on its modular building system, which Chiau says is the highest level of industrialised building systems (IBS). “We believe that even with the slowdown in the property market, there is a unique value proposition from IBS and there will continue to be strong demand for our products.
“Furthermore, the government has been focusing on affordable housing and it will continue to be in strong demand. Which means that the faster way and cheaper way to build houses will continue to be in demand,” he says.
Chin Hin also hopes to benefit from the government’s plans to decrease the country’s dependence on coal-fired energy and increase the usage of renewable energy. The Pakatan Harapan manifesto targets to increase renewable energy usage to 20% from the current 2%.
“We are at the sweet spot in this business, being one of the largest solar EPC companies. I think that in the coming years, we will benefit from the strong demand for solar (power) in the country,” he says.
Chin Hin owns 45% in Atlantic Blue Sdn Bhd, a solar energy investment company which specialises in large-scale solar farming and the provision of solar photovoltaic (PV) solutions.
Its renewable energy business currently contributes RM4 mil to RM5 mil to profit and the company hopes to bump that up to RM10 mil after tax in FY19.
Despite the underwhelming recent results and subdued construction sector, Public Investment Bank has maintained its outperform call on the counter.
“Investment merits of the group remain attractive, underpinned by increased contributions from its capacity expansions in the autoclaved concrete and precast concrete businesses and greater penetration in the Industrial Modular Building System space,” it said in a research note. FocusM