Gut instinct plays big part in United Global CEO's decision-making

FOR lubricant specialist Jacky Tan, intuition is indispensable when it comes to making decisions in a complex and rapidly changing environment.

In particular, "Listen to your heart" and "Go with your gut" are his key axioms, as seeded by his father's counsel more than four decades ago.

"I asked my dad for advice when I first started working, and he told me 'be cautious', recalled the chief executive of SGX-listed lubricant manufacturer and trader United Global.

"In my younger years, I took it literally, always focusing on the facts, figures, and details. It was only much later that I realised what he was really referring to - I had overlooked the softer side of business transactions, which are human connections between people."

This is especially crucial for deals and alliances. "You may be looking at absolutely fantastic numbers and huge profits at the beginning, but if, somewhere down the road, you can't work with your chosen associate or partner, and the joint venture collapses, you end up with nothing," he added.

The University of Canberra graduate with a Bachelor of Applied Science in Building spent eight years with two Indonesian mining and quarrying companies before moving to Singapore when racially motivated riots erupted in the country in May 1998.

Given his background in the mining industry - which consumed container-loads of oils, greases and fluids for heavy equipment every month - Mr Tan decided to enter the lubricants business. Together with his wife and father-in-law, Mr Tan founded United Oil Company in 1999.

He remembers the journey as one marked by a lot of sweat, some blood, and occasional tears. "We started as a small player in the market, and very few people knew who we were. For the business to break even, we needed to manufacture and sell at least 50 container loads of lubricant oils every month," he said.

This meant reaching out to potential customers through a dizzying volume of cold calls. "We were on the phone constantly, persuading potential clients, negotiating prices, dealing with rejections - that was our lowest point."

Slowly, through sheer determination and hard work, things turned around. "Once customers realised that we strive to give them the best value and quality in terms of our products, and always delivering what we promised, the business took off."

Building bonds

Mr Tan focused on laying the foundation for United Oil's future by forging a bond with clients based on honesty and openness. "We created a reputation for ourselves as a reliable supplier, one who isn't greedy, but fair in terms of pricing," he said. "And we are where we are today because of the support from our customers."

Mr Tan's make-or-break attitude also played a crucial role. "If we think that something is worth doing, then we die-die must try our best to make it work," he said.

Aside from turning the small family-run outfit into a thriving business, Mr Tan also dreamed of listing the company and diversifying its focus beyond lubricants. Thus, United Global - with United Oil Company, United Innovations Company and United Renewables Company as subsidiaries - was born.

As a fitting culmination to decades of hard work, United Global was listed on the Singapore Exchange's Catalist board in July 2016.

The group provides a wide range of lubricant products under in-house brands, such as United Oil, U Star Lube, Bell1, HydroPure and Ichiro, as well as lubricants for third-party brands. It is also involved in the trading of base oils, additives and lubricants. With an extensive network of distributors spanning more than 30 countries, United Global supplies lubricant products to the automotive, industrial and marine sectors.

An ISO 9001-certified company, the United Global has a blending capacity of 60,000 metric tonnes (MT) per annum in Singapore, and 80,000 MT in Indonesia.

It has put in place a three-pronged growth strategy. It plans to expand its existing lubricants business organically in the region, focusing on in-house brands and through partnerships that offer good synergies. It will continue to establish strategic alliances with its distributors, boosting its footprint in key overseas markets by tapping their expertise and local knowledge, Mr Tan said.

The group is also actively seeking opportunities to diversify revenue streams. An example of such a diversification is its 2017 venture with Japan's M-TechX Group to make oil-absorbing, nano-fibre materials for a range of industrial and commercial applications. Other collaborations involve the marketing and distribution of the group's lubricant products in Australia, China and Myanmar.

Expanding footprint

Last September, Madrid-listed oil major Repsol acquired a 40 per cent stake in United Global's subsidiary United Oil Company for up to US$46.5 million. By leveraging Repsol's international brand presence to boost production and distribution, United Global is well-positioned to tap new growth opportunities, Mr Tan said.

"Repsol approached us in 2018 because as a listed company, we had strong corporate governance and a high level of transparency. Second, we had a good footprint in Indonesia, which was in line with Repsol's goal to expand in that market," he added.

Indonesia, which accounted for nearly 40 per cent of group revenue in 2018, will remain the group's prime growth market. "Our ambition is to be among the top five lubricant suppliers in the country. Indonesia is expected to see some of the strongest demand for lubricants over the next decade as the government continues to roll out infrastructure projects," Mr Tan said.

Apart from South-east Asia's largest economy, two other markets - Vietnam and Malaysia - are also expected to enjoy exponential growth.

"Our vision is to build a sustainable business, for the common good," Mr Tan said. "Other opportunities out there include renewables and innovation, particularly in the area of new technologies."

The 55-year-old has another personal goal - to continue growing United Global's market capitalisation. "When we first listed in 2016, my aim was to double our market cap in three years, but everyone laughed at me. In the end, I proved them wrong," Mr Tan grinned.

United Global has a market value of more than S$140 million today, compared with S$70 million when it listed in 2016.

"My target - or rather my dream - is to double our market cap every three years, so that by the end of my 10-year tenure as CEO, we can see a 10-fold increase."

Gung-ho optimism

Meanwhile, challenges abound, not the least of which is the Covid-19 pandemic. "What keeps me awake at night? This is one," Mr Tan admitted wryly.

"Our supply chain has been impacted - we haven't been able to deliver our fuel products to China over the last few weeks, and are seeing very slow sales in the country, as well as in Taiwan and Hong Kong," he added.

"Although sales volumes have fallen by about 10 per cent to 15 per cent, orders are still trickling in. We are monitoring the situation closely. Given our geographical footprint in Asia-Pacific, I reckon our risks are fairly well spread out."

At the end of the day, when faced with circumstances beyond one's control, "you should plan what you can, and do what you can", he added.

"There will be opportunities that pop up, even in tough market conditions, such as acquiring companies with strong fundamentals at good prices, or sealing synergistic partnerships."

That "can-do" and "get-going" attitude is what characterises the father of three boys, aged 19 to 27. "I want to do the best that I can, as long as I am physically able. I push my limits to see how far I can go," he said.

"The satisfaction I get from building a business from scratch, achieving my goals along the way, as well as helping my staff and customers - no words can really describe that experience," he added.

A self-taught calligrapher who puts brush to paper whenever he needs to de-stress, Mr Tan places a premium on doing good and giving back to society.

"I always tell my kids, 'Never be complacent'," he said. "I hope each one of them will be a much better man than me - displaying my strengths and learning from my weaknesses."

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.