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Monday, June 29, 2009

Ho Hup drafting turnaround strategy

The three-year business plan will see the company operating under three business entities - construction, property development and trading of ready-mix

Property and construction company Ho Hup Construction Co Bhd said it is drafting a three-year business plan that will see it return to profitability next year and ensure that its profitability will continue into the future.

The plan will see the company operating under three business entities - construction, property development and trading of ready-mix - to be headed by three individuals who will lead a team of staff to drive up sales.

"Each head of division will have to come up with their own business plan, which I will enhance to ensure that they are profitable from day one. I will monitor their progress every two weeks," Ho Hup group managing director Lim Ching Choy told Business Times.

"At the end of the day, I am here to make profits for the company and enhance shareholders value. Two years from now, we may have a dividend policy," he said.
Lim, formerly the chief executive officer (CEO) of property developer Magna Prima Bhd, took helm at Ho Hup on June 1 2009.

Dubbed "the turnaround man", he was asked to helm Ho Hup by its major shareholders to return it to profitability.

The company has been in the red since 2006. In the fiscal year ended December 31 2008, its net loss was RM56.2 million.

Lim said he has been spearheading Ho Hup's corporate restructuring to reduce debt, inject new capital and generate revenue since he took office.

"You need six months to reposition, turn around and overhaul the business of an ailing company. I will be doing a lot of things in the next six months what other people have not done in the last five years. I believe a good working philosophy and commitment from myself is important to make things work in a short span of time," Lim said.

Lim, who was in banking for 22 years, had turned around loss-making Magna Prima in 12 months. Prior to that, he had rebranded and repositioned Mah Sing Group Bhd in 18 months.

He was involved in both companies for 30 months and four-and-a-half years, respectively.

"I may stay longer in Ho Hup. It has all the licences for any kind of construction jobs. That alone is encouraging and rewarding," Lim said.

Ho Hup is betting on its RM2 billion Jalil City development in Bandar Bukit Jalil, Kuala Lumpur, and new jobs to return to the black next year.

The 24ha project, which will be launched in the fourth quarter, is poised to contribute 60-70 per cent of the company's revenue per year, starting from 2010.

It features 176 shop-offices housed in four- to eight-storey buildings, a hypermarket, a piazza, 2,000 serviced condominium units, and a Grade A office building.

"We will launch the offices worth RM600 million in two phases. We hope to complete sales in a year. We have more than 100 registrations," Lim said.

Ho Hup will also launch 20 semi-detached houses in Bandar Bukit Jalil, worth RM1.5 million each or RM30 million in total, in September.

Apart from residential projects, it will look to clinch government contracts involving infrastructure and high value construction works, and develop mega projects as it had previously.

Ho Hup has bid for government and private sector road and related infrastructure jobs worth RM500 million and hopes to get one or two this year.

Its ready-mix business is also set to improve as it is reactivating its eight plants in Terengganu, Klang, Bukit Jalil and Jinjang to increase volume. The unit is expected to generate RM6 million in revenue this year.

By Business Times (by Sharen Kaur)

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