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- S P Setia braces for Liew’s departure
- Making a success out of Battersea
- S P Setia proves critics wrong
| S P Setia braces for Liew’s departure Posted: 21 Jun 2013 05:39 PM PDT EARLY next month, the top brass from the proponents of the massive Battersea project will be in London. The fact that they are there to launch the second phase defied what a lot of experts in that city thought couldn't be done. The man who thought the Battersea project would work was S P Setia Bhd's Tan Sri Liew Kee Sin. He took all of one hour to convince his counterparts from Sime Darby Bhd and the Employees Provident Fund that the project was bankable. Liew candidly says that people there were thinking about what had worked in the city all this time. Project sizes were small and they did not think that the real goldmine of demand actually resided outside the country. Thinking out of the box, Liew marketed the first phase to where wealth was being generated. Investors from England, South-East Asia and Hong Kong were sought after and they gladly cut the cheque to buy into the latest dream Liew had conjured. It's his vision, daring and luck that will change the skyline at Battersea and throughout many large-scale projects in Malaysia. But in under two years, Liew will pack his bags and head out the door at S P Setia. He will leave behind a motherlode of projects that based on current prices is valued at a gross development value of RM70bil. "I'm not staying on and will not stay past March 2015. There's no turning back, it's over for me. Checkmate," says Liew in an interview with StarBizWeek. "I'm just doing my job as a CEO, to the best of my ability." S P Setia is set at least for the foreseeable future. But will it miss the vision and execution that made it what it is today? Can it survive in the long term without the paternal figure of the company? What S P Setia will lose Liew is arguably the numero uno in the property business in the country and that's based on what he has done and promises to do for S P Setia. "A lot of property companies have good landbank but they have not been able to unlock the value of their land like what S P Setia has done under Liew," says an analyst. S P Setia has been transformed from a run-of-the-mill property company to an award-winning property developer under the stewardship of Liew when he and Datuk Voon Tin Yow bought into the company in 1996. It has bagged the "Oscars" of the property industry and has been acknowledged to be the country's best employer in a recent survey by Aon Hewitt. In making the company what it is today, Liew has been honoured alongside Datuk Seri Nazir Razak and Tan Sri Tony Fernandes as among the country's top CEOs. As it stands, two of Liew's lieutenants will take over. Voon, deputy president and COO, will take over as president and CEO once Liew leaves. Backing up Voon will be Datuk Teow Leong Seng, currently the CFO and executive vice-president, and the group's other executive vice-presidents. Many of them have been with Liew for years and according to analysts, know the business and the company like the back of their hands. Liew too acknowledges that he works in a team with both Voon, Teow and other senior managers. They as a group are instrumental in the success of S P Setia. "There is no doubt they have the team of people who can run the company but the question is will they stay," says an analyst. Such questions point to whether the transition will materialise? People wonder if the loyalty of key managers will be to S P Setia or Liew when the time comes. "Only concern is that whoever takes over must not go after my people because they are people I trained in Setia," says Liew. "That's why we have the LTIP (Long term Incentive Programme). Whoever goes after my people, they're stupid-lah because they are the backbone of the company. It's not me." Teow at the sidelines of Invest Malaysia echoes a concern many investors are asking. "The key concern is whether the people will follow him or leave to join other real estate companies. I am hoping not," Teow says. Liew, who has a 2.76% stake left in S P Setia, does not pause on telling about the sale of his shares next. "The remaining stake, or 67.79 million shares left in the company, will be exercised next year on March 19. It will be sold to PNB at RM3.95. If the market price is higher, I can sell it to the market." Once that block is sold, the odds of Liew staying on for another year gets close to zero. "I won't stay until the end of the contract. No pride lah," he says. "For us, must have pride. The longer I stay, I lose the respect of my fellows." There is, however, a bunch of unfinished business left at S P Setia for Liew to do. He wants to stay on as long as necessary to ensure there are no loose ends in the projects he has laid out for the company. Liew doesn't want his legacy destroyed and wants to ensure that projects such as Battersea, Fulton Lane in Australia and numerous other developments in and out of the country are delivered to its clients. "I want to make sure if you buy a Battersea unit, you will have it delivered to you," he says. Once he leaves, the execution risk will fall on his successors and also on Permodalan Nasional Bhd (PNB). PNB paid RM3.95 to increase its stake in S P Setia from 32.9%. It now has 64% stake held by its two funds Yayasan Pelaburan Bumiputra and Skim Amanah Saham Bumiputera. "I don't think PNB will run down its own investment. It may not grow but it will not run it down," he says. The takeover offer obviously ruffled feathers between PNB and Liew and it's an uneasy truce at the moment. Liew gets on with his job and PNB is the controlling shareholder of the company. Liew acknowledges that S P Setia will not be the company it is today without the influence of PNB. He may disagree with it on certain policies but finds no fault in the way it went about conducting the general offer. "The reason why it did it (the takeover), I don't know. But it must have a reason after spending RM6bil to take it over," he says. PNB did not respond to questions on what happens next for the company after Liew leaves. As it stands, the signal being sent out by the market is not flattering. Analysts say Liew's departure has been priced into the stock, and that uncertainty is a drag on the company's stock price. The underperforming stock price is an echo of sorts on worries that the company will not be as dynamic once Liew bolts. "It will be business as usual but to grow bigger than what it is today without Liew will be tough," an analyst says. Doubts over the sustainability of the vibrancy S P Setia has generated has seen it underperform other property stocks, and by a wide margin. Its stock is up a mere 8.4% since the start of the year, compared with the Bursa Malaysia property index which is up 32%. Other property heavyweights like UEM Sunrise Bhd is up 50% and Mah Sing Group Bhd is 56% higher since the beginning of the year. That does not make sense for a company that is going to hit record sales this year and hit a profit of RM1bil in 2017 when earnings from Battersea can be accrued. "If there had been no takeover, we could be trading at RM5.00," says Liew. S P Setia's stock closed at RM3.34 yesterday. "In the last three months, the other property stocks have moved ahead but they don't have the landbank, profits and sales we have. They also say it's all priced in. We have RM3.5bil cash in Setia and 5,000 acres, not easy to destroy us." Life after S P Setia Liew, the youngest son of a lorry driver and rubber tapper, is the quintessential Malaysian success story. When Voon and he took over S P Setia in 1996, the company then had two projects Bukit Indah Ampang and Pusat Bandar Puchong. Over the years, Liew grew the company but felt it was better to have a small stake in a large company than the other way around. His stake gradually got diluted as the company grew in size and stature. His journey also exposed him to a broader thinking, all along absorbing ideas as what to do next in terms of growing the company. His first taste of high-end development was Duta Nusantara and that gave him the belief that S P Setia can transform itself in the high-end property segment which it is today comfortable with. Along the way, his grasp of branding and the importance of it saw him advertise the company's name on a global scale. Apart from Battersea, the award-winning Setia Alam township is the flagship development and the showcase of what S P Setia has become today. Liew's track record has made him a hot commodity in the property business. His son is already in the property business with Eco World Development Sdn Bhd, which recently bought 248.8ha in Iskandar Malaysia for RM534.7mil. Liew played down chatter that Eco World is the vehicle for him once he steps out of S P Setia but analysts say it will not surprise the market if he does surface in the company run by his son and friends. And it's not like Liew will retire any time soon, given the zest he still has for the business. People in the property business understand the value he brings. Liew's reputation is already opening doors for him for life after S P Setia. "A lot of proposals do come in. Some even ask to work only with me, not PNB but I told them cannot. I'll talk to them, professionally, only after I leave," he says. "Next chapter of my life is not an issue. I don't worry too much about it." Until then, Liew will leave behind a system that he, together with his lieutenants, has honed and fine-tuned. An academy trains a lot of employees of the company, equipping them with language and business skills important in the industry. "We look for attitude and determination to work. We believe we can train them, that's why we have the Setia Academy," he says. That's essential in today's cut-throat business world. "We have to have people of calibre to do it for us. We must at least have 10% of them (employees) who are clever enough to change things and move ahead. "Another thing is loyalty, but there are two things in loyalty one is to earn respect from the boss; come thick or thin you stay with me. The second aspect is the salary we pay out. If you want people to stay, you must pay," he says. That loyalty will surely be tested come the day Liew seeks his next business adventure. Related Stories: |
| Making a success out of Battersea Posted: 21 Jun 2013 05:39 PM PDT WITH phase one an unprecedented success story, S P Setia is raring to go further with its prestigious London project, the Battersea Power Station redevelopment. The first phase, whimsically named Circus West, was dedicated to developing residential units, all 866 units of one- to three-bedroom apartments as well as townhouses. A month ago, the group has sold 95% or 824 units of its phase one, with £681mil (RM3.51bil) worth of committed sales from international purchasers. "Phase two is coming," group CEO Tan Sri Liew Kee Sin says. It will be a retail and entertainment outlet housed within the walls of the art deco power station, with Dubai Mall as the gold standard Liew aspires. "We want to learn from the Dubai Mall; the thinking, the concept behind the largest mall in the world," he says. Liew has had the opportunity to learn from the developer of the Dubai Mall, Emaar Properties. "It so happen the chairman is a good friend of mine and he has allowed us to take a peek into the back room' of the development." It is what baffles Liew about the Dubai Mall that imbued him to emulate the concept in Battersea. "Why and how could a mall of 3.4 million sq ft in the middle of a desert be so successful?" Herein lies the irony Emaar Properties had taken a leaf out of Kuala Lumpur's retail development when it came to study what makes Suria KLCC tick, a template which it then built on and turned into the Dubai Mall. "We learn from each other," Liew speaks of a competitive yet open working relationship with its peers. A coveted address "The other reason I wanted to meet (Emaar) was to invite them to open a hotel with us in London," he says. Emaar Properties has three hotel groups under its belt, one being the super luxurious Giorgio Armani, another targeted at the technology savvy market called Vida and the third which Liew hopes to bring to Battersea The Address. "I'm very interested in The Address, a three-to-five star hotel which Emaar already has a few," he says, "It's a business-cum-family hotel, a new concept with first-class service." Battersea needs three hotels, Liew believes, to cater to the melting pot that London is. "I was thinking of an American hotel because the American embassy is only a ten-minute walk away," he says, naming a few renowned brands like Sheraton or Hyatt. "That area is also quite close to Sloane Square and Knightsbridge, so an Arab-based hotel would also be good," he envisions. He, however, has not figured out who to bring in as the third hotel. Battersea is easily connected, via Chelsea Bridge, to the affluent communities of Chelsea and Knightsbridge on the north bank of River Thames, where Sloane Square is situated. Battersea, when launched in January this year, was not promoted in the Middle East, Liew points out. "So if I can convince Emaar to bring in The Address there and launch it in the Middle East, then we'd have at least another 1,000 homes sold in the future," the forward-looking property chieftain says. The homes he refers to would be Battersea's Phase Three. Nevertheless, to bring in hotels meant the Battersea developer consortium would have to give up a fraction of its premium London landbank. But Liew is willing. "Of course, a hotel is a loss leader, the land would be gone but if we think of it the other way round the amount of people it can bring in, maybe it's worth it." He compares Battersea to Setia Alam, where land was carved out for community purposes such as schools and places of worship. "Everything we do is for value enhancement, or else we wouldn't have repeat customers whether in Singapore, Melbourne or here." Hospitality component With elements such as shopping, recreation, connectivity from the Nothern Line extension and residential units in place, the additional hospitality component could only increase the attractiveness and value of the once abandoned power station. "Battersea will do very well," he says confidently. As with other developments in S P Setia's portfolio, whatever the developer introduces must have an appreciative effect on the whole project. Again, he takes Setia Alam as an example. "Like in Setia Alam, every time we put in a new element, the value goes up. "When we first bought the land, people said we were stupid to acquire 4,000 acres," he recalls, "But then we put in the roads and schools, and the value went up." For this township, Liew explains that the group continues to upgrade its facilities, with the mall and convention centre expansion plans already on the drawing board. "Our job is to enhance the value because only then will buyers continue purchasing from us," he says of building customer trust and loyalty. For Battersea, the shopping mall is targeted to be ready by 2018 and the Northern Line extension by 2020. These two years are dog-eared for expected jumps in value. "But to make it happen, we have to work on it. Build a total concept and make it work for us too." Liew has his travels to thank for, when it comes to finding inspiration for his projects. The world was a library of ideas from which he continuously learns and brings back to the S P Setia table. "I travel a lot. The idea of growing (any project) is there from day one and the search for the elements to grow it it's everywhere. "When we embarked on Battersea, we knew from the start what we needed to do," he says, "Having the experience of doing big things in Malaysia helps." That said, no S P Setia development happens by chance. The romanticism of big ideas has to be grounded by the reality of facts and figures. Although S P Setia, together with its partners in the Battersea project Sime Darby and the Employees Provident Fund (EPF), make the biggest landowner in the cosmopolitan London, Liew says his team has done extensive homework to ensure what is planned for is feasible. For one, Liew is a man who intends to deliver everything he promises. S P Setia is the biggest developer in terms of gross development value for the 39-acre Battersea project (while) Londoners are used to developing one or two acres, Liew says. Battersea had been, for decades, passed from one ambitious hand to another without any plans coming to fruition and it finally stands as the largest redevelopment project in England. "It's so big no one has dared to take it on but with our experience in Malaysia, it is second nature for us." He adds: "Even though the market is different, the principles are the same. Your cost per sq ft, your building price per sq ft, it's exactly the same." Liew reveals that the team had done six months of studying London and that the research was enough for them to determine the cost per sq ft for the development, even though they did not have experience building in London. He says gut feelings play a part when gauging the market's receptiveness towards the development. Besides learning from other global developers, the market is another key source of clues for S P Setia when deciding the direction of its projects. To make sure he is not missing a beat, Liew believes in putting the eggs in different baskets differentiating the products to suit the market's various demands and affordability. "Like in Setia Alam, there's Setia Eco Park and Setia City which is one high-end and one mid-range," he says. Similarly, in Battersea, S P Setia offers a range of products even within phase one which has studio units as well as duplex townshouses. Middle Eastern market He gives a scenario: Let's say for now, phase one is £1,000 per sq ft, how are we going to sell £1,200 per sq ft? Maybe the design has to be a little bit different, maybe smaller apartments with better furniture, or maybe different target markets. He goes back to reaching out to the Middle Eastern market. "If I can get The Address to come, the Arabs will come," he says, explaining that the way rooms are laid out in the hotel is meant for big entourage, a major consideration for Arabs who travel with big families. He also intends to keep to the concept Emaar Properties has for The Address where the hotel and residences portions share common facilities. Serviced by the hotel operator, the residences could then be priced higher. "There are many ideas in the world that we can adopt but we need to give them to Setia brand that is, service and product quality." Of course, S P Setia's ambition is not without its detractors. Going into Battersea, Liew admits that the local and Singaporean press and analysts did not doubt S P Setia, "it was the international press that doubted us". When Liew invited Sime Darby and EPF to be partners, he told them very simply but in jest: "If the three of us combined cannot sell 800 units for phase one, the three of us should resign." For Liew, it was easy to convince old friends EPF former chairman Tan Sri Azlan Zainol and Sime Darby group chief executive Datuk Mohd Bakke Salleh. "Convincing their boards was the difficult part." Liew says that Azlan and Bakke were always supportive of what he did, so it was never an issue but the investment committees were the tough part. For the investment committees, he recalls, it was whether the consortium could achieved sales. "We felt combined, people will follow us, and we were right." |
| S P Setia proves critics wrong Posted: 21 Jun 2013 05:42 PM PDT VINDICATION comes in many forms. And sometimes, it just keeps coming. Who can blame S P Setia Bhd president and CEO Tan Sri Liew Kee Sin if he's a tad smug about how the naysayers have been proven wrong again and again regarding the property developer's acquisition of a huge oil palm plantation in Shah Alam a decade ago? That 4,000 acres, then known as North Hummock Estate, is the site for integrated township Setia Alam and its upscale sister township Setia Eco Park. Both developments have shaped up into award-winning communities with much appeal among home-buyers and investors. Or as Liew puts it, they have become S P Setia's branding. It certainly didn't start out that way. When the company announced on April Fools' Day in 2002 that it was buying North Hummock Estate for almost RM600mil cash (or RM3.49 per sq ft), the market responded with little humour. The deal was enormous for a company the size of S P Setia, whose market capitalisation at the time was about RM1.5bil. The company had been looking to buy about 1,000 acres or so of real estate to replenish its land bank, but the owner of the estate was only interested in selling it all or nothing. In tandem with the proposed acquisition, the developer said it needed to raise capital via a private placement, a special bumiputra issue, a bonus issue and a rights issue. (It didn't help either that on the same day, S P Setia also disclosed its plan to pay RM52mil cash for a 22% stake in Loh & Loh Corp Bhd, a listed construction company that had carved out a niche in water supply infrastructure works.) In fact, some investors felt the land deal was too big a purchase for the company. Liew recalls the fund managers dumping the stock and the share price "dropping like a hot brick". "If you look back at The Star reports in 2002, people were saying, This guy has gone crazy. He's bitten off more than he can chew'," says Liew. People might have privately uttered something like that, but there were no StarBiz reports with such a quote. Nevertheless, the news reports did reflect some concern, primarily because the proposed capital raising would dilute earnings per shares, and the possibility that the company's bottomline would deteriorate for at least two years before income from the land started kicking in. With the land acquisition, said an analyst, the group's earnings risk had edged higher. In response to the announcement of the land purchase, RAM placed S P Setia's bonds on the Rating Watch list, with a developing outlook. Two months later, the rating agency reaffirmed the long-term ratings of the bonds but kept them on the list until the completion of the capital raising, which RAM said played "a critical role in providing balance to S P Setia's financial profile". Today, such worries seem unnecessary. According to Liew, back in 2002, the best brains in the property business were convinced that S P Setia could extract a gross development value (GDV) of no more than RM5bil from the land. It is currently estimated that when fully completed, Setia Alam and Setia Eco Park would have yielded a combined GDV of RM20bil. Plus, there were awards to celebrate. For example, Setia Eco Park was twice a gold winner in the Fiabci Prix d'Excellence Awards in 2007 for Best Master Plan and in 2011 for Best Residential (Low-Rise) Development. Last month, Liew travelled to Taichung, Taiwan, to accept another gold award in the master plan category. This was for Setia Alam. To him, it was detailed planning and teamwork that turned a potential indigestion-inducing buy into a benchmark project. With a larger-than-targeted tract of land on its plate, S P Setia had little room for mistakes. In this case, the road to success was, well, a stretch of road. More accurately, what made a difference was the company's decision to fund and build the RM150mil Setia Alam Interchange, which allowed direct access from the New Klang Valley Expressway to the two townships. Other crucial moves were the disposal of about 600 acres to PKNS (the Selangor State Development Corp) to immediately boost cash flow, and teaming up with the Employees Provident Fund (EPF) and Great Eastern Life Assurance (M) Bhd to develop Setia Eco Park. Liew attributed these winning measures to others at S P Setia. "I'm only the guy with the guts, the one who pushes, the talker. But these alone can't solve problems. I depend on my people to do that. They are the ones who sit down and come up with solutions," he says. "It's not just about guts. Teamwork is very key. We have a strong team that come up with the detail, the plans, the right concepts." Which explains why Liew wasn't the only person from S P Setia at the Fiabci event in Taichung. The company had about 50 people there as part of a nine-day study trip to Taiwan and Seoul, South Korea, to visit commercial and recreational developments such as parks, integrated projects, museums, train stations and convention centres. Liew says it is a standard practice to bring along employees on study tours whenever the company gets an award overseas. "So not only do we receive an award, we also learn something. We've been to so many places together. That's how we build up our Team Setia. We don't do things alone; we do things as a group." Of course, the choice to visit these places in Taiwan and South Korea has a lot to do with what S P Setia plans to in the future. Setia Alam is at the mid-way mark and the next phase centres on the 150 acres earmarked for commercial properties such as office towers, the second stage of the Setia City Mall and a hotel that will be ready by the end of next year. The township also has the biggest convention hall in Shah Alam. "The next game changer for us will be commercial development," says Liew. |
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