IN recent years, the booming e-commerce landscape in Malaysia has led to flourishing demand for logistics services, and the entry of new players offering last-mile delivery.
This has generated growth for the domestic transportation industry, particularly for those who supply vehicles to last-mile delivery service providers.
Realising the potential of the logistics business, homegrown Hong Seng Group is stepping up its game to capture a bigger market share of the industry.
With more than half a century of experience in lorry-related businesses, the Penang-based group seeks to expand its vehicle leasing operations, to capitalise on the e-commerce wave among others.
Hong Seng Group, which has exclusive sole distributorship of a number of emerging Chinese brand heavy and light vehicles in Malaysia, eyes future expansion in a big way.
One of the steps taken by Hong Seng is to enter the Malaysian capital market, with the aim to leverage on the huge fundraising opportunities for its expansion plans.
On Aug 5,2020, the group via its 100%-owned subsidiary Hong Seng Assembly Sdn Bhd (HSASB) emerged as the single largest shareholder of the main market-listed MSCM Holdings Berhad, following HSASB’a acquisition of a 29.89% equity interest in MSCM.
With the acquisition, Hong Seng Group managing director Datuk Teoh Hai Hin was appointed executive chairman of MSCM, while his daughter was appointed to the board of directors effective Aug 5.
MSCM has proposed a name change to Hong Seng Consolidated Berhad, which will be subject to shareholders’ approval at a general meeting later.
The entry of Hong Seng Group into the Malaysian capital market marks a major milestone in the group’s corporate history since it was established in 1965.
Teoh is optimistic that the best is yet to come as Hong Seng is expected to ramp up its expansion plans and further strengthen its market presence not only in Malaysia but across Asia.
“We have definitely come a long way since my late father Teoh Teng Seng laid the foundation for this growing business which was further reinforced by my mother Ong Ah Hua, the chairman of Hong Seng Group.
“Our entry into MSCM will see us transforming the listed company into a formidable logistics player in South-East Asia, particularly in the area of lorry supply.
“We aim to offer heavy and light vehicle leasing at competitive rates and will work hand-in-hand with any parties providing last-mile delivery.
“Our heavy and light vehicle leasing offering enables the logistics companies involved in e-commerce-related delivery and others to undertake an asset-light business model.
“On the other hand, it offers a stable recurring income, ” said Teoh.
MSCM is also set to diversify into the money-lending business after the shareholders approved its proposal on July 24 this year.
This is expected to complement Hong Seng Group’s plans to expand its heavy and light lorries leasing business as hire purchase schemes could be offered to customers.
For the record, MSCM’s wholly-owned subsidiary Food Cheetah Sdn Bhd obtained a moneylender’s licence issued by the Housing and Local Government Ministry, which is valid for two years until Nov 14,2021.
Hong Seng Group will be leveraging on the capital market to raise additional funds for its new hire purchase leasing business.
Over the next five years, the group seeks to gain a comfortable market share in the segment and potential collaboration with e-commerce delivery services providers.
“We have a strong conviction about the potential of this hire purchase leasing business, especially in view of the Covid-19 pandemic.
“There is clearly a mismatch between cash-strapped potential customers and reduced borrowing activities from the banks.
“This is where we can step in by offering a hire purchase scheme for our customers and at the same time, increase our sales.
“We definitely foresee a great opportunity for exponential growth in the hire purchase leasing business, ” said Teoh.
Focus on lorry distribution
Hong Seng started out 55 years ago as a mere workshop with an initial capital of RM2,000, but the group – now helmed by the Teoh second generation – stands today as the market leader in lorry and heavy machinery remanufacturing and rebuilding services in Malaysia.
Hong Seng Group imports used vehicles that meet stringent requirements from Europe and Japan, and once here, the vehicles are dismantled down to their components. Each component is refurbished or replaced as needed.
Wear-and-tear components are replaced with new ones. The components, sub-systems and systems are then re-assembled.
Hong Seng Group is certified ISO 9001 and its rebuilt lorries are renowned for their reliability, quality standards and extraordinary value.
Apart from the lorry business, the group is also involved in asset management, property and construction development.
The four main business segments of Hong Seng Group are the engine, generator and lubricant division; automotive division; construction and agricultural machineries and equipment division; and housing development and asset management division.
Teoh said that while Hong Seng would continue to expand its existing business portfolio of repairing and rebuilding vehicles, the greater focus will be on the distribution of its heavy and light lorries as well as the distribution of agricultural and construction heavy machineries.
“Our lorry business is mainly involved in imports, assembly and marketing and we will aggressively expand this line of business, especially now that we have access to the capital market via our shareholding in MSCM that will be re-named Hong Seng Consolidated Berhad.
“We currently have the sole distributorship of several emerging Chinese brands of heavy and light lorries. In recent years, we have seen a growing appetite for these brands in Malaysia, and hence, we will ramp up our efforts to further build brand awareness of these vehicles in Malaysia for a much-improved sales and leasing interest, ” he said.
The Chinese brands involved are Sinotruk HoHan, XCMG Hanvan and Shacman H3000. Among the products offered are prime movers, tippers, cargo and mixer.
Under the light lorry series, Hong Seng Group offers the following brands from China: Yangtse, ZNA, DFSK, JBC, DFAC, Foday and ZXAuto. Among the products under these brands are single cab pick up, double cab pick up, panel van and light lorry series of 5,000kg and 10,000kg.
Construction machinery brands include Shantui, Shandong Lingong (LGMG), Sany Group (SANY) and Kion Baoli (BAOLI), which can provide various types of road and construction machinery products.
As the business activities of each company in Hong Seng Group are closely related to one another, this allows the group to synergise its strengths, expertise and resources to the advantage of its customers.
“The end results are swift, efficient service and exceptional products at lower than market prices, ” pointed out Teoh.
He added that Hong Seng Group’s operations and business strategy is backed by its research and development strength.
“Upon importing the required materials from our main suppliers abroad, we add on the assembly process and undertake uncompromised quality control checks before delivering the vehicles to the dealers or our customers.
“In terms of our marketing solutions, we sell and provide after-sales services and spare parts as well as end-financing options.
“To date, we have set up 15 centres providing 3S activities throughout the Peninsula as well as Sabah and Sarawak, ” he added.
Supported by its stellar track record and the long-term business relationships it has built with its clients, Hong Seng Group is poised to grow even bigger and stronger moving forward.
Throughout its successful corporate history, Hong Seng Group has and continues to serve many notable names including large corporations and key industry players.
Hong Seng Group’s achievements over the years are well reflected in the multiple industry awards it has won. These include the Anugerah Swasta Berprestasi Tinggi 2015 from the Government and Truck of the Year 2015 – Value for Money Award and Sin Chew Business Excellence Awards 2013.
Hong Seng Group’s entry into the Malaysian capital market via MSCM will undeniably be a new and significant catalyst in its pursuit to achieve exponential growth over the long run, especially for its new hire purchase leasing business.
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