The Oriental Holdings Bhd (OHB) empire was founded by the vision of one man, the late Tan Sri Loh Boon Siew. One of Penang’s most illustrious personalities, the rags-to-riches entreprenuer was also famed for his philanthropic activities.
OHB is now in the hands of the second generation of the Loh family, who have successfully steered its core business away from the challenging motor sector to plantations and in the process, built up a large cash reserve of over RM2 billion.
A succession plan has been paved for the third generation to take over in OHB, and this candidate is likely to be Loh Kian Chong, 34, who is believed to be the son of Loh Kar Bee, the late founder’s eldest son.
Kian Chong was appointed to the board of OHB as executive director in 2009. Two years before his appointment to OHB, he was appointed deputy chairman of family vehicle Boon Siew Sdn Bhd.
According to OHB’s 2009 annual report, Kian Chong holds a Bachelor of Business in Property degree from the Royal Melbourne Institute of Technology (RMIT). He began his career as a director of the Boon Siew Group of Companies in 2000, at the age of 24.
Kian Chong is also a director of Penang Yellow Bus Company Bhd and Boon Siew Credit Bhd, both family companies. In the directors’ profile section in OHB’s annual report, he is stated as a “major shareholder of Boon Siew Sdn Bhd and a major stockholder of OHB”, with direct and deemed interest of 54.5% of the company.
Interestingly, he is the only Loh family member on OHB’s board who was listed with such a large deemed interest in OHB. Datuk Loh Cheng Yean, Boon Siew’s eldest daughter, who is the executive chairman of OHB as well as chairman of Boon Siew Sdn Bhd, was listed in the annual report with a direct and deemed interest of 0.13% in OHB.
Kian Chong’s grandfather, Boon Siew, set sail to Penang in 1927, from Fujian, China, when he was 12.
With virtually no formal education and the ability to speak only Hokkien, he started work as an apprentice car mechanic. It was fated that the motor vehicle business would play a significant part in Boon Siew’s life. He would make a huge fortune later, by securing the Honda motorcycle business franchise in 1958, and then the Honda car franchise in 1969.
Boon Siew passed away in 1995, at the age of 80, leaving key management responsibilities of the family’s business to eldest daughter Cheng Yean and second son-in-law Datuk Robert Wong. It was reported that Kian Chong’s father was not interested in running the business while Boon Siew’s second son, Loh Kah Kheng, who was to be groomed to take over the business, died in 1987.
Cheng Yean and Robert Wong have been able guardians of the family business, evident from the swelling cash hoard at OHB, the family’s key listed arm, over the years.
Still, the challenges that had swept through the country’s automotive industry over the last 10 years — from foreign principal carmakers taking back their local franchises to government policies that favoured the national car Proton — took their toll on OHB.
OHB lost the control of its then lucrative Honda car franchise to its principal Honda Japan in 2000, and ended up with only a minority stake of 15%. The company was swift to replace its lost Honda car franchise with a Hyundai franchise in 2001, which it owned 60%.
But then in 2009, it sold its entire remaining stake in the Hyundai business to Sime Darby Bhd, marking its exit from the car distribution business.
The Honda motorcycle business is still within the group, but with its ownership reduced by half.
In 2008, the family put 50% of the Honda motorcycle business, previously held 100% by family vehicle Boon Siew Sdn Bhd, under OHB, and invited Honda Motor Japan to take up the other 50% as a joint venture partner.
Forty years after the company began, the automotive operations — the foundations of OHB’s fortunes — are no longer its cornerstone business.
With its automotive operations reduced to assembly and parts manufacturing (which produce thin margins), plantations and income from investing the group’s over RM2 billion cash hoard now make up the bulk of OHB’s earnings.
Cheng Yean and Robert Wong had the foresight to step into plantations some 10 years ago, investing in the sector when palm oil prices and plantation land prices were still low. This division is now bringing in strong earnings to the group and has added to its cash coffers substantially.
With its roots in Penang, OHB also has valuable land and buildings on the island, which has seen a strong property boom in the past few years. Its landbank has not been revalued for sometime.
Despite the rising plantation earnings, swelling cash hoard and understated property assets, the group still lacks the visibility for strong growth and other ingredients that would excite investors.
Hopefully this will change over time.
Written by CM Siow
This article appeared in The Edge Financial Daily, September 3 2010.
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