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BRC Asia: Forging a reinforcing steel powerhouse
SEAH Kiin Peng, CEO of SGX-listed reinforcing steel fabricator BRC Asia Ltd, seeks opportunities to initiate change and influence events.
Reminiscent of the "dreamers of dreams" in English poet Arthur O'Shaughnessy's "Ode", the 43-year-old aspires to be among "the movers and shakers of the world".
"Management and people, dealmaking and making a difference - these are my passions," said Mr Seah, who graduated with Bachelor and Masters of Science in Management degrees from the London School of Economics and Political Science.
"As BRC Asia is a manufacturing entity serving the cyclical construction industry, it's a day-to-day, month-to-month, and quarter-to-quarter ride through the waves - we need to make sure our staff have good working conditions and keep their jobs, and that we're able to deliver quality products to our customers on time."
Mr Seah began his career in the Singapore Foreign Service before joining the shipping industry. In March 2010, he was appointed executive director of BRC Asia, with then-group managing director Lim Siak Meng as his mentor. Eight years later, Mr Seah was named the group's chief executive officer.
"The purpose of my entry into BRC Asia was very clear - this was part of the group's succession planning," he recalled.
"Our management team now has a good mix of professional managers and shareholder representatives," he added, referring to Esteel Enterprise, which holds more than 70 per cent of BRC Asia. Esteel - owned by You Zhenhua's Advance Venture Investments and Liu Bin's TopTip Holding - completed its takeover of the group in September 2017.
Incorporated in 1938 in Singapore, BRC Asia was listed on the Mainboard of Singapore Exchange in July 2000, and has a current market capitalisation of about S$320 million. In the year-to-date, the stock has generated a total return of 7.9 per cent, compared with total returns of 5.2 per cent and 7.2 per cent for the benchmark Straits Times Index (STI) and broader FTSE ST All-Share Index respectively.
The group, which draws on more than a century of expertise in steel fabrication technology originating from Britain, designs and manufactures a range of prefabricated reinforcing steel products. Ranging from cages for beams, columns and pile caps, as well as mesh for household shelters, to heavy prefabricated beam and column reinforcement, these innovative products aim to help contractors construct "better, faster, and therefore cheaper".
With factories in Singapore, Malaysia and China, BRC Asia caters to builders in public and private housing sectors, as well as the commercial and industrial space. A strong proponent of off-site prefabrication, the group helps clients cut down laborious and inefficient in situ steel fixing work, allowing them to enjoy greater on-site productivity and shorter construction cycles.
As a testament to the recognition of its brand, steel meshes in many markets are known simply as "BRC". The group has also participated in a number of iconic projects, such as Singapore's Marina Bay Sands and Resorts World Sentosa integrated resorts, as well as the world's tallest public housing project, The Pinnacle@Duxton.
Last July, BRC Asia completed its S$200 million purchase of 100 per cent of Lee Metal Group Ltd, a distributor, fabricator and international trader of steel products. According to analyst estimates, the acquisition is expected to have raised BRC Asia's market share to 45-55 per cent from about 20-30 per cent.
The group has expanded its net asset value (NAV) to nearly S$200 million prior to the Lee Metal takeover, from below S$40 million in 2006, thanks largely to the management team led by Mr Lim. After coming on board, Mr Seah also focused on extending the group's reach beyond domestic shores, into Malaysia - which he started from scratch - and China.
Now, being the largest reinforcing steel fabricator in Singapore post-acquisition, and with established operations in two overseas markets, the group is eyeing opportunities in the rest of Asia.
"Demand in Singapore is mature, and we need to explore new markets," he said. "We want to leverage on the resources, facilities and expertise available in Singapore, Malaysia and China to broaden and deepen our reach - our vision is to be the region's reinforcing steel powerhouse."
With this in mind, BRC Asia has embarked on steel trading and distribution activities in Thailand and Indonesia.
Apart from the risks and challenges of venturing abroad, BRC Asia is also grappling with integration pains.
"What is most challenging about any acquisition is the people and the culture. It's extremely tough to achieve cohesiveness within a short period of time, especially when you've had no prior relationships with the people whom you are integrating with," Mr Seah pointed out.
"While there's no question about the group being able to perform efficiently, to have a unified and united group - and not just at management level - takes time. This is a target we'll be working towards over the next two years."
Meanwhile, the sector's improving prospects bode well for the group. Singapore's construction sector grew 2.7 per cent year-on-year in the third quarter of this year, extending the 2.8 per cent and 2.7 per cent expansion rates seen in the first two quarters of 2019, according to advance estimates released by the Ministry of Trade and Industry.
According to Singapore's Building and Construction Authority (BCA), domestic construction demand is expected to hold steady or edge higher this year from 2018. The value of construction contracts to be awarded in 2019 is projected to range between S$27 billion and S$32 billion, versus a preliminary estimate of S$30.5 billion awarded in 2018, BCA data showed.
Over the medium term, Singapore's construction activity will likely continue to improve, according to BCA data. Demand is estimated to reach between S$27 billion and S$34 billion per year in 2020 and 2021, and could increase to between S$28 billion and S$35 billion per year in 2022 and 2023.
Besides public housing developments, large government infrastructure projects will underpin demand. These include the S$9 billion expansion plan for Singapore's two integrated resorts, the Cross Island high-capacity subway line spanning east and west, a new integrated tourism development at Jurong Lake District, Changi Airport Terminal 5, and Tuas Megaport.
"The government is embarking on the next lap of nation-building, and I would expect the next decade to be a busy one in terms of public sector construction demand," Mr Seah added.
The outlook for China and Malaysia also remains bright. Apart from the sheer size of the China market, steel prefabrication as a method of construction is expected to gain popularity, and enter a fast-growing phase because of the government-led, nationwide push for green construction. According to industry estimates, the country's steel prefab market could grow at a compound annual rate of 14-24 per cent between 2018 and 2020.
Meanwhile, the Malaysian construction sector is expected to register a CAGR of 4.7 per cent between 2019 and 2024, according to data from Mordor Intelligence. The sector had averaged a 7.9 per cent annual growth rate from 2010 to 2016, underpinned by government infrastructure investments under the 10th Malaysia Plan 2011-2015.
As at June 30, 2019, BRC Asia's order book stood at about S$1 billion.
Industry prospects aside, Mr Seah is also focused on customer experience. Reflecting the group's commitment to efficient, timely deliveries and customer satisfaction, individual chat groups are created for each major project. "My name in the chat group tells the contractor that we are not a company that pays lip service to customer support," he said.
- This is an excerpt from SGX's "Kopi-C: The Company Brew", a regular column featuring C-level executives of SGX-listed companies. Previous editions can be found on SGX's website www.sgx.com/research.