Source : Business Times - 25 Mar 2009
‘MY greatest achievement is to have got here safely without too many battle scars.’
Ow Chio Kiat (or, CK Ow, as he is known in business circles) knows what steadfastness and sustainability are all about. He has survived and thrived in cut-throat businesses which have seen many of his compatriots fall by the wayside over the past four decades.
‘Achievements are relative, and come in stages,’ observes Mr Ow. ‘The human instinct is to improve oneself. There are two things to aim for in this life: First, to get what you want. And after that to enjoy it. Only the wisest men can achieve both. But to be successful, one needs to be tenacious, pragmatic, steadfast, and most importantly, do regular reality checks. There is no place for fantasy checks.’
A reality check came when he was just a 16-year-old schoolboy in 1962. That’s when he suddenly found himself inheriting his father’s wooden ‘tongkang’ (lighter) business, Hai Sun Hup, after the senior Ow died of a heart attack.
The fourth child, and second boy, in a family of six, he was chosen by his mother - who saw a certain grit and determination in her young English-educated son - to run the family business comprising six barges and two tugboats.
‘While my other siblings were pursuing their own professional careers, and quite happily so, this business was thrust upon me,’ he recalls, as he sits in his plush office (which has an authentic English pub attached) occupying the entire ninth floor of Southpoint building at Cantonment Road. ‘My mother had me believe that my whole world and my family would crumble if I did not take up my new responsibilities.’
The teenager soon found himself in a tough business dominated by competitors who would stop at nothing in the rough-neck waterfront trade.
‘I wasn’t satisfied with merely getting ahead of the pack within this industry. I wanted to move out of the trade and upstream into the coveted ship agency business, which was then mainly under the control of the British trading houses.’
And he did so by attracting and recruiting talented young executives from the European shipping companies, the port authority and even government agencies, then setting up his first agency.
The move into the shipping agency business proved to be a big breakthrough for a young man who was barely 30 years old. At 32, he was appointed the chairman of Mitsui OSK Lines Singapore - the youngest head of a locally based shipping agency. His youth raised eyebrows among some senior executives within the Japanese shipping giant.
After trying a stint at law school - which was interrupted by his business - Mr Ow pursued his chartered shipbroker qualification, while still running his business.
In 1978, Hai Sun Hup acquired its first ocean-going vessel, Singa Satu. By 1981, Mr Ow was already operating three berths under the PSA’s appropriated berth scheme. Handling about two million tonnes annually, he was the biggest operator at the port.
Then followed a series of joint ventures and tie-ups with some of the major players on the global shipping scene, including Sumitomo Warehouse of Japan, Wilhelmsen Lines of Norway, Wallenius Lines of Sweden and Clipper Lines of Denmark. Mr Ow headed all these joint ventures.
In 1989, with S$12.7 million in net profit, Hai Sun Hup listed on the Singapore bourse to become the second largest listed shipping company here. Its IPO - one of only two that year - was subscribed 100 times.
In 1994, cashed up with the listing proceeds and a couple of well-timed share placements, Hai Sun Hup started acquiring hotels in the leading Australian cities of Sydney, Melbourne, Brisbane, Adelaide and Perth.
‘I was uncomfortable investing more money in ship-owning,’ Mr Ow says. ‘I saw in Australia not just a country, but also a continent. And properties there could be acquired at huge discounts to their replacement value - something like 30 cents in a dollar.’
Over the next two years, he spent some A$300 million (S$299 million) to acquire luxury hotels from global chains which included Ritz-Carlton, Regent, Intercontinental, Sheraton and Beaufort. Hai Sun Hup also started buying other Australian commercial and residential properties for development over the rest the 1990s.
Mr Ow also defied all convention by not just owning the hotels but also firing the global brand managements, and re-branding all the properties under the ‘Stamford’ name. Many thought at the time that this was a risky move. But it paid off.
Hospitality industry guru John Smith of Horwath Asia Pacific marvelled: ‘Compared with the development of its peers, Stamford should not have had the right to be born - let alone achieve all it has today. Consider what it had to contend with: It started in the business 30 years late. It chose the farthest corner of the world in which to build its empire. It adopted a strategic plan that was not focused around pursuing lucrative long-term management agreements from hotel investors. And it wasn’t born of wealthy US or European parents looking for personal fame and global notoriety. And it went about buying luxury hotels at a time when other investors were ducking for cover from the recession of the 1990s.’
Stamford didn’t seem to care for any of the existing rules, Mr Smith observed.
In late 2000, Mr Ow demerged the group’s shipping and logistics businesses, placing them under Singapore Shipping Corporation Ltd (SSC). By then, SSC owned 14 vessels, managed 32 more and operated a three-berth terminal at PSA, and had consolidated assets of S$210 million.
The property arm, with combined assets of A$700 million mainly in hotels and land in Australia, was listed as a separate vehicle, Stamford Land Corporation Ltd.
Recently, Stamford Land confounded the Australian business community by pre-leasing its entire 14-storey new Grade A-category Perth office tower to a subsidiary of oil giant Chevron, despite generally poor market conditions.
Today, the group operates 10 hotels with nearly 2,500 rooms in five major Australian cities. According to Mr Ow, the hotel investments have provided a steady income stream which stabilised the group’s bottom line and protected it from the vagaries and turbulence of the shipping industry.
‘Every man and his dog can start a shipping company, due to its low entry barrier,’ Mr Ow says. ‘My strategy has always been to buy into distressed assets, as long as they are cashflow positive and show potential to improve their performance.’
In 2006, Mr Ow decided to hive off SSC’s thriving logistics, agency and terminal operations businesses into Cougar Logistics Corporation - which became his third listed vehicle. In the process, he enriched SSC’s shareholders, giving them one Cougar share for every four SSC shares.
Between 2005 and 2006, Mr Ow had also started disposing of 10 of his bulk carriers, supertankers and container ships, raising some S$300 million in cash. The remaining ships are currently on long lease to the end of their lifespan.
‘The high tide which has lifted all boats cannot last forever,’ he told BT at the time. ‘Ship prices have reached dizzying heights. There are 4,000 new vessels on order globally and this will impact the balance of demand and supply.’
Cashed up, Mr Ow launched a takeover for SSC and Stamford Land. The offers failed because they were below market prices. Nevertheless, Mr Ow managed to buy back Mitsui’s 4.6 per cent stakes in each of the companies - raising his personal stake in SSC to almost 40 per cent and Stamford Land to 42 per cent. ‘As the market was not waking up to the group’s real worth, I decided to raise my stakes,’ he says.
Today, at 63, he says he is looking forward to the day when he can relinquish his role as CEO of his three listed companies, and just remain as the chairman of their boards.
‘My contribution to this business has been tenacity and common sense,’ he says. ‘I also always exhort my key staff to work themselves into a state of redundancy, because unless they are able to groom successors to take over their jobs, they cannot be promoted.’
Meanwhile, for their shareholders, SSC, Stamford Land, and Cougar Logistics have always delivered generous yields.
Over the past five years to end-March 2008, the companies have paid out some $356 million in dividends to shareholders, which is, remarkably, higher than the $300 million in cumulative net profits during the period. This was possible because the company was cashed up from the sale of vessels, but had decided not to invest in ships at sky high prices.
And even after the generous payouts, the companies still have over $100 million in cash, remain profitable and generate positive cashflow.
While not physically big, Mr Ow is widely recognised as a giant among Singapore’s self-made millionaires. In 2008, he was ranked 14th among Singapore’s wealthiest men by Forbes magazine.
Today, he can sit back and reflect on his 40-year journey as he enjoys his fine wines, landmark properties (including his signature homes in Singapore, London and Sydney), expensive cars and exotic watches. He is Singapore’s non-resident ambassador to Argentina and also has several honours and titles bestowed upon him over the years by various governments and territories around the world.
‘My achievements are relative,’ he says. ‘I didn’t exactly come from a poor family, but I guess my son is more fortunate than I am.’
His friends point out that Mr Ow did not start out in life holding a good hand. But he played his cards well, they add. That he could have vaulted from a dying business - lighterage - to helming three profitable listed companies is a feat not many can achieve.
‘When I look around today, most of my peers who started with me four decades ago in the marine business are all gone,’ he says. ‘Some may say I’ve been lucky. Others would credit it to my survival instinct. Whatever it is, I am still here. Perhaps this is because I have never been in the business of making bubbles.’
‘In Stamford Land, we have successfully managed an organisation of some 2,500 employees in a foreign country for the past 16 years. This is a very competitive environment where we had to battle with the local hoteliers and the global brands. It has definitely been a lot of sweat and toil.’
Going forward, Mr Ow sees the current recession as an opportunity for cashed-up companies to buy distressed assets with growth potential.
‘We are keeping our gunpowder dry even as we survey the battlefield,’ he remarks. ‘There are opportunities in the current economic adversities. You can acquire big projects, but you must have sufficient resources to sustain your ambitions. Your resources must match your vision. Vision without resources is hallucination.’
His longtime friend Chua Thian Poh, chairman and CEO of Ho Bee Investment, describes Mr Ow’s long journey in these terms: ‘CK’s achievement today is not due to a stroke of luck. It is his steadfast determination; intuitive foresight and natural intelligence that saw him successfully bring an unknown Singapore brand overseas.’
Indeed, if there is one lesson which Mr Ow’s success teaches, it is about sustained and measured growth, and survivability.
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