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Monday, July 03, 2006

IOI Group: Unilever of Malaysia?

Mitsubishi used to be the largest conglomerate in Japan. Samsung, used to be the largest conglomerate in South Korea. Whereas, Jardin Matheson used to be the largest conglomerate in Hong Kong.

Jardin Matheson control Cycle & Carriage, which own Mercedes franchise in Malaysia. Jardin Metheson also control Dairy Farm, a company that take over Giant hypermaket in Malaysia. Jardin Matheson also control Guardian pharmacy in Malaysia.

Jardin Matheson used to be deemed as a company control by colonial British's family. Chinese richest family in Hong Kong, Li Ka Shin has take over another conglomerate Whampoa ( Now Whampoa-Hutchinson) Whampoa operate one the most busiest port in the world, whereas Hutchinson dominated telco market in Hong Kong, like Ananda Krishnan's Maxis in Malaysia. Li Ka Shin also operate Watson pharmacy in Malaysia

Malaysia government also take over a conglomerate from British colonial. Malaysia government take over Sime Darby. Sime Darby used to be a proxy to Malaysia economic.

IOI Group, initially compete with Sime Darby's Sime UEP Properties Bhd via IOI Properties. Later, IOI group also venture into plantation. However, unlike Sime Darby, IOI Group do not have Automobile division like Sime Darby.

However, market capitalization of IOI Properties overtake Sime UEP Properties. IOI Group also have the largest market capitalization among all the plantation company. Eventually, IOI Group market capitalization over take Sime Darby even IOI Group do not have Motor and heavy equipment division. IOI Group's oleo-chemical division is one of the top 5 market capitalization company in Industrial counter on Bursa Malaysia.

In Malaysia, the other plantation group that also operate a motor and heavy equipment division is Hap Seng consolidated Bhd. The company is being demerge from Malaysia Mosaic Bhd which has smaller market capitalization. The demerger has make IOI Group difficult to swallow the company as it has larger market capitalization.

The increase in market capitalization of IOI Group has lead to it controlling shareholder, Tan Sri Lee Shin Cheng over take Quek Leng Chan and Lim Goh Tong in Malaysia's richest 40 ranking by Forbes Asia. Please be reminded that Quek Leng Chan is second generation of tycoon, which mean he inherited a substantial portion of his wealth from his father and his uncle whereas Lim Goh Tong involve in lucrative gaming industry. Tan Sri Lee Shin Cheng was not on the top ten list few years ago!

Tan Sri Lee Shin Cheng come from a poor family. He has to sell ais-cream during his school day to make end meet. He also never involve in sin industry(gaming industry). This achievement is really not easy.

Malaysia manufacturing industry is threaten by China's low cost factory. This is just like Europe country a decade ago which threaten by Japanese lower cost manufacturer. Thus, we need to learn from European they compete with Japanese low cost factory a decade ago.

I used to benchmark Malaysia with Netherlands. One of the largest Netherlands company is Unilever Group. IOI Group, which has take over a few specialty oil and fats company in Netherlands and plantation land in Malaysia, clearly is a potential Unilever in Malaysia.

After Hong Leong disposal of OYL. Which have manufacturing plant overseas. The only Malaysia multinational company that have LARGE operation oversea only left IOI Group and YTL Corporation Bhd. IOI Group has announced venture into biodiesel recently.

IOI Group start with Lee Shin Cheng acquired an industrial gas company Industrial Oxygen Incorprated(IOI). He later injected his property company Lam Soon Huat(Now IOI Properties Bhd) into the company. This is similar with Tan Sri Datuk Lau Ban Tin's BIG's Industries Bhd.

It is not sure how many percentage of BIG Indsutries Bhd shares control by Tan Sri Lau Ban Tin now. Anybody who abl to control BIG Industries Bhd able to emulate Tan Sri Lee Shin Cheng step in creating wealth in one generation.



Anonymous said...


Do you have more information on how Tan Sri Lee took over the industrial gas company? As you said in the article above, he was selling ice-cream, then how did he get the money to buy the listed company?

Peter said...

Hi Calvin,

He work in plantation estate and I guess he rise to become estate manager, if not mistaken.

As a Estate Manager, he has to take care of his worker and have to build hostel for them. This give him an experience pf bilding house. He become housing developer.

He was a developer operating a company call Lam Soon Huat, if not mistaken, when he take over IOI. He later injected the company to listed company and later rename IOI Properties after that.

Anonymous said...

Thanks Peter.

He is some info on his early childhood (in Mandarin).