Metro's new CEO outlines growth plans

Singapore

THE leadership refresh at Metro Holdings, which will put current group deputy chief executive Yip Hoong Mun in the driver's seat from June, has in fact been a few years in the making.

Since he joined the property and retail firm in 2017, Mr Yip was in fact "designated from day one" to take over as group chief executive, incumbent Lawrence Chiang, 67, told media on Tuesday in a group interview.

Mr Chiang took over the chief executive role from Jopie Ong after the latter's death in 2016. He and chairman Winston Choo then began searching for a successor because the latter felt it would be important to look for "someone from a different culture to progress our company to a different level", Mr Chiang said.

As for Mr Ong's four children, Mr Chiang said they had all worked in the company before, but "found it doesn't suit them".

Through a search process with management consulting firm Korn Ferry, they found Mr Yip, now 57, who had spent over 20 years with CapitaLand in China, the Gulf region, Indonesia and Vietnam.

Mr Yip joined Metro as group chief operating officer and chief executive of Metro China in January 2017. In May 2018, he assumed his current role. Mr Chiang will take on the role of adviser from June 1.

Mr Yip said that he intends to deepen Metro's presence in property development and investment in the four key markets of China, Indonesia, Singapore and the United Kingdom.

In the last couple of years, Metro's business has already begun heading in that direction, with purchases such as 5 Chancery Lane in London and 7 and 9 Tampines Grande in Singapore. The company first ventured out of Singapore some 30 years ago.

Mr Yip wants to focus on generating recurring income for the group. He said: "If you look at the shareholders of Metro, they have been holding the company for many, many years so we want to make sure our shareholders are happy. The way to make them happy is to get good dividends for them. To get good dividends, we need good recurring income. The goal is very financial driven."

According to an OCBC report this year, the largest shareholders of the group include the second and third generation of founder Ong Tjoe Kim, with a deemed interest of 35.3 per cent.

Ngee Ann Kongsi and Takashimaya Company hold 10.3 per cent. As at June 6 last year, 49.01 per cent of total issued shares (excluding treasury shares) are held in the hands of the public.

Metro seeks to make "very niche and smart investments where you can realise the profit in short term and some to hold long term", Mr Yip said.

In China and Singapore, it intends to pursue commercial assets with potential to realise the upside after retrofitting and works. In Indonesia, it plans to pursue affordable and mid-end residential projects. In the United Kingdom, the company will look at residential and commercial projects.

Metro will also stick to its long-held philosophy of partnering local property players, who are in charge of operations on the property level.

Such partners have to be reputable and "can execute the work in the country", preferably be long-term beyond executing just one project and have similar values as Metro, Mr Yip said.

To grow, Metro will leverage its strong balance sheet - gearing wise, it is net cash positive as at the end of this financial year - and the capital market.

The company last year established a S$1 billion multicurrency debt issuance programme to "have a ready war chest for investment", Mr Yip added.

When asked about Brexit and the US-China trade war, he said: "You look at the world today, you tell me, which country doesn't have its own problems?

"You need to look at the situation and screen through the noise, because the challenges are always there. But challenges come with certain opportunities and the ability to identify the opportunities and work on them is important."

Geographical diversification will be key to Metro's strategy, and the company will also explore other regional countries.

In Indonesia, Metro believes that there is good fundamental demand for housing in the mid-tier segment, while in China, it's mainly looking at Shanghai and Beijing.

Mr Yip said Chinese domestic policies can present opportunities to purchase, such as the acquisition of Shanghai Plaza which came during a time of tight financing locally, leading local developers to sell assets at good value if they needed financing.

Meanwhile, in the UK, he said the company is cautious but "will take a more open mind" to see if there are opportunities, given the Brexit situation.

As for the retail side of the business, Mr Chiang said that the Metro brand has helped give the company a "pedigree" as it ventured abroad since around 30 years ago.

While he acknowledged Metro's retail business has been declining, he pointed out the company still earns royalties from malls in Indonesia, and it still sees value in the Metro brand.

Mr Chiang said: "Metro doesn't cost us much to keep it running, but the value intrinsic or otherwise cannot be calculated to dollar value. There's a bit of legacy and history."

Moreover, retail takes up a small part of the business now, he said. For fiscal 2019 ended March 31, the results of which were released Tuesday, that segment recorded a net loss before tax of under S$6.4 million, compared to a S$113.4 million profit before tax for its property business.

Metro posted fourth-quarter net profit of S$51 million, up from S$930,000 in the year-ago period, on the back of fair-value gains on its investment properties of some S$22.6 million from Metro Tower and Metro City, Shanghai, and 5 Chancery Lane.

The company is proposing a final dividend of two Singapore cents and a final special dividend of 2.5 cents per share. A year ago, it gave a final dividend of two Singapore cents and a special dividend of three cents.

Metro shares added 3.03 per cent or three Singapore cents on Tuesday to close at S$1.02 after the leadership transition news and full-year results were announced. (see amendment note)

Amendment note: Due to an editing error, a previous version of the story said that Metro closed at S$1.02 before, rather than after, the leadership transition news and full year results were announced. The article has been amended to reflect this change.