Running a tight ship

From a small set-up dealing in electrical cables, a family business grew into a listed company that supplies the shipping industry. MELISSA LOH meets BH Global Marine's Alvin Lim

Jul 27, 2006
The Business Times

HAVING successfully launched its initial public offering (IPO) in September last year, marine equipment supplier BH Global Marine is looking to leverage on that to jumpstart its entry into international markets.

"My advice is, concentrate on your core business which you are familiar with. That will help you to grow even stronger before you venture into other areas.' - Alvin Lim, executive chairman of BH Global

Alvin Lim, executive chairman of BH Global, said: 'We are trying to penetrate markets in Indonesia, Malaysia and China. We will try to find Asian dealers who are familiar with their local markets to aid our ventures into these areas.'

BH Global traces its roots back to 1962 when Mr Lim's father, the late Lim Jee Chye, and three other partners set up a business dealing with electrical cables. As a child, Mr Lim used to help out in the store during his school holidays and after completing National Service in 1985, he joined the company, then known as Guan Hup Electrical & Hardware, as a sales executive.

'Doing business in the past was very different; previously it was a small scale, person-to-person enterprise,' recalled Mr Lim. 'One man had to perform 10 jobs, we needed to do everything from top to bottom ourselves. We bao ka liao.' (meaning all-encompassing in Hokkien).

In 1988, Guan Hup was voluntarily dissolved and a new company set up - Beng Hui Electric Trading. This was jointly held by Mr Lim, his father and Mr Lim's siblings, Vincent and Eileen. It changed its name to BH Global in 2004. Starting operations from just one shophouse along Sam Leong Road, the business expanded throughout the 1990s, eventually acquiring a warehouse at Penjuru Lane in 2004 with a built-in floor area of almost 80,000 sq ft.

'We have performed every year from the beginning until now. Except for one or two crises where our sales were maintained or slightly increased, we have seen significant yearly improvement,' says Mr Lim, who attributes his company's success partly to the importance of the shipping industry to Singapore.

Business is booming for BH Global, which offers nearly 8,000 marine electrical products from more than 370 suppliers to serve its 800 customers, including ship chandlers, ship owners, shipyards and others.

In 2005, BH Global posted record revenues of $30.3 million, an increase of 23.4 per cent over 2004's $24.6 million. Compounded annual revenue growth was 20 per cent between 2003 and 2005. Net profits for 2005 stood at $6.8 million, marginally lower than the $6.9 million raked in the previous year. However, profit figures for the last two years were more than double that in 2002 and 2003.

Asked what brought about the decision to list the company, Mr Lim said: 'We were more of a family business, everything was decided by the family. We had the technical knowledge but not management expertise. In order for the company to grow faster and to stay ahead of our competition, we felt that an IPO would be the easiest way to attract talent to join us.'

'There was some initial resistance to change,' added Mr Lim, 'but sooner or later we had to take this step.'

Helping BH Global with preparatory work for the IPO was Hong Leong Finance (HLF). As issue manager, HLF worked with BH Global for over a year to perfect the IPO prospectus. BH Global was the first underwriting of an IPO for HLF, a joint effort with UOB Kay Hian.

'Through the management of our IPO, we came to know of HLF's banking and other facilities. Opportunities for ventures may come along, but we need support on the financial side. HLF is the one who worked with us during the IPO and we have chosen them as our partner for future plans,' said Mr Lim.

The future, at least up till 2009, seems bright for BH Global as local shipyards have jobs lined up till then; BH Global itself has received pre-orders dating up to 2009, said Mr Lim. While some may say the shipbuilding industry here is heading for a slowdown, Mr Lim holds a different view: 'From now till 2009, we will concentrate more on supplying materials and solutions for new ships. After this period is over, some say there will be a recession, but by this time, these ships will need repair and maintenance due to wear and tear. It is a cycle which is continuous.'

On BH Global's plans for international growth, Mr Lim is cautious. In the case of China, he is of the view that because of its sheer size, 'it is impossible to take a bite out of every piece of the cake. We will concentrate on certain shipyards, and slowly we will venture out, depending on demand and our progress.'

When asked if he could give any advice to local start-ups looking to grow overseas, Mr Lim said: 'First, you must know your line very well. Many people end up losing money venturing into other lines where they see others making profits.'

Mr Lim recounted how his company previously tried its hand at a high-end boutique in China, but failed as they did not have people who knew the boutique business and how to access the market.

'My advice is, concentrate on your core business which you are familiar with. That will help you to grow even stronger before you venture into other areas,' said Mr Lim.