At the turn of the century, Danny Ng used most of his savings to acquire Fibromat (M) Bhd, a soil erosion control product manufacturer and supplier. Through grit and sheer tenacity, he grew the company, eventually leading it to a listing on the Leading Entrepreneur Accelerator Platform (LEAP) Market last year.
As at Sept 28, the company had a market capitalisation of RM71 million based on a share price of 33 sen. This values the 58-year-old’s current shareholding of about 90% at more than RM64 million.
While this is a far cry from the net worth of some of the country’s richest, it is still a mammoth achievement for the boy born into a poor family in Pondok Tanjung, a small town in Taiping.
To illustrate how small Pondok Tanjung is, Ng, Fibromat’s managing director and CEO, says one could see the entire village if one were to turn 360° while standing in the middle of it. There were only a few wooden houses with zinc roofing in the village, which was surrounded by rubber and oil palm trees. The approximately 200 residents relied on a well, candles and kerosene lamps for their water and electricity supply until the 1980s.
“My journey as an entrepreneur in the past four decades hasn’t been smooth. But I’m very proud of building up the company and wealth largely on my own.
“Many say a person who is born poor is unfortunate. I disagree. The fact that you are poor makes you hungry for success and wealth. It makes you want to achieve something,” he says.
Being poor not a disadvantage
When he was 10, Ng would wake up at 4am every day to help his mom, who ran a coffee shop below their rented home. He would chop dried prawns and green chilli for her to make fried mee hoon, for sale to rubber tappers at 5am.
Ng remembers having to go with his mother before the start of every school year to borrow money from a relative, taking several buses for the journey.
“One of my paternal uncles was rich. My mom took a bus from Taiping to Nibong Tebal where his house was to borrow money for us to buy textbooks.
“My mother fought to give us the best things in life. Whatever we needed, she would make it for us. She would even beg for us if she needed to. My dad was a contractor but unfortunately, he didn’t take care of the family much,” he says.
This experience created in Ng a desire to be successful. “I told myself that I would never want to be in the coffee shop business when I grew up. I wanted to be more successful than that,” he says.
Ng’s hunger for wealth and success stems from wanting to repay the sacrifices made for him by his parents, especially his mother. “I saw how my mother suffered. I want to give her the best, to make her proud,” he says.
At the same time, he is not ashamed of coming from a poor family.
“People like us work very hard to get what we want. Because we know that if we don’t, we won’t own anything,” he says.
Ng, who studied mechanical engineering at the Federal Institute of Technology, started his career in 1984 as a technical executive at Taiho Trading Sdn Bhd. His job was to sell and install sealing products such as door and window seals.
“I come from a kampung and couldn’t speak English back then. My mom said there was no way I could survive. I was so shy and I didn’t talk well. But I knew I had to learn it to progress in life,” he says.
Ng’s monthly salary increased to RM700 from RM500 in a matter of three years owing to his hard work. Unfortunately, he was forced to take a hefty pay cut during the 1987 financial crisis.
This forced him to branch out on his own so he could support his family. He started a water-tank lining business in 1988 with RM50,000 raised from refinancing his car, pawning his wife’s jewellery and borrowing from close friends.
The company, Linetech Sdn Bhd, specialised in installing thick films for water tanks to prevent chemical contamination, corrosion and leakage.
“It was a dirty job that nobody wanted to do. But I liked it. There was very little competition and the profits were good,” he recalls.
Ng’s first breakthrough came just a year into the business. The company was offered a contract to line the water tank of the 100-year-old reservoir in Taiping, Perak. He finished the project successfully with RM60,000 in profit. Other projects continued to come his way, and his team grew to more than 40 people in the next few years.
That period was probably the most comfortable in his life, as he had millions in cash on hand, says Ng. “Several million ringgit was quite significant 20 years ago. While I’m worth more today, my wealth is tied to my business [in the form of shares] and not in cash. I could have retired back then,” he laughs.
But Ng’s sights were no longer set on just monetary gains. He had a bigger ambition — to be CEO of a public-listed company.
In 1994, when the water tank lining business became increasingly competitive, Ng began to focus on another new venture called Westbury Tubular Structures Sdn Bhd, which specialised in the fabrication of steel tubular structures.
The company grew quickly and bagged various steelwork projects, which included the Langkawi International Airport in 1995 and Stadium Bukit Jalil in 1997. It was then awarded a RM600 million contract to design and build the steelworks for the Sepang International Circuit (SIC) a year later.
The company was doing so well that Ng and his partners considered listing it. They appointed an investment bank as adviser and his dream of being the CEO of a public-listed company seemed within reach.
Then the Asian financial crisis hit, and the value of the SIC project was slashed in half. The company’s imports of stainless steel were affected by the much weaker exchange rate and eventually, the bank called in its loan.
Westbury Tubular Structures folded soon after and Ng lost a huge portion of his hard-earned savings. He felt defeated but counted himself lucky as he was still a relatively young man of 37 and able to withstand this huge setback.
In 1999, he joined MTS Fibromat Sdn Bhd (known as Fibromat Bhd today) as its general manager and acquired the company in 2001. He spent two decades expanding the company before finally listing it on the LEAP Market last year.
“I couldn’t sleep the night before the listing ceremony. I was so excited to hit the gong! It was a moment that I had been waiting decades for.
“I had neither rich relatives or friends to lend me money, nor much government support. Whatever I achieved was through my own efforts.
“It has taken me much longer than others to become the CEO of a public-listed company, but I’m happy about how far I have come,” says Ng.
Bold investments in land and property
Various factors have led to Fibromat’s success today. For instance, it was the only soil erosion control company in Malaysia during the early days and there was not much competition in the domestic market. The company was also awarded contracts for various infrastructure projects undertaken by the government in the 2000s to grow the country’s economy.
Ng, however, is particularly proud of two major investment decisions he made, both related to property.
The first was in 2006, when Fibromat acquired a 61,451 sq ft parcel of land in Bukit Beruntung, Rawang, to manufacture soil erosion control products. Despite initial resistance from his business partners, Ng decided to buy it anyway.
This required the company to fork out RM2.3 million, which was a lot of money for it, as it could not secure external funding from banks.
“Our business was still relatively small then and we didn’t take any bank loans in the first 15 years. They didn’t understand our business and didn’t want to fund us.
“We had to rely on ourselves to buy that piece of land. And we hardly had enough. But I pushed for us to buy it and build the factory,” he says.
It turned out to be the right call. The factory enabled the company to expand its business by manufacturing its own products and provide more holistic soil erosion control services to its clients. Fibromat recently sold the factory and is expected to book a RM4 million profit for its 2020 financial year (FY2020).
In 2011, Ng purchased a 242,070 sq ft piece of land in Rasa, Hulu Selangor to build a bigger factory. Again, his business partners had some reservations, this time due to the RM10 million investment required.
“We are one of the very few local players in this area. If I wanted to bring up the company profile and compete with the foreign players, I had to make such a bold move.
“We bought the land in cash, but we didn’t have enough money to hire a consultant to design and build the factory. So, I designed, supervised and built the factory myself.
“We built it slowly, and stopped building it for a while when we ran out of money. We then continued to build it when money came in again. It took us about three years to build the factory,” he says.
Ng says the land and property are worth about RM20 million today and the price could appreciate further if the East Coast Rail Line’s alignment reverts to its original route — going through Bentong and Gombak — as proposed by the previous Barisan Nasional (BN) government.
For all his successful investments, Ng has had his share of those that didn’t work out. For instance, he once invested in hydroseeding equipment that turned out to be a failure mainly due to leakages as the seeds and fertiliser meant for hydroseeding projects were sold by the company’s staff for their own gain. He lost about a million ringgit in that investment. He also lost money when two woodchippers the company imported from China and Korea were left unused for years without generating any income.
“These are just two examples. I made a lot of bad investment decisions. But it’s normal. No matter how sharp you are, you will make mistakes. It is more important to learn from them.
“Also, I always tell myself to make twice the money I have lost from making bad investment decisions. If I lose one million, I will work hard to make two million back for the company,” he states.
Ability to manage personal wealth is key
Ng is, however, much more prudent when it comes to personal investments. He only invests with money he can afford to lose. His personal portfolio consists of equities and real estate.
“I’m not a great investor [when it comes to my own money]. I’ve gained some and lost some. When I lose, it comes with an opportunity cost. The money that I lost [could have been] used to do other things, which include providing funding to my company in difficult times.
“This is why I only invest my extra savings, so that I won’t be put in a difficult situation when I make a bad personal investment decision,” he says.
Ng adds that the ability of a founder CEO (an individual who establishes a company and holds its CEO position) to manage his own money is as important as his or her ability to manage a company.
“The personal wealth of an entrepreneur and his or her business are closely connected. As the founder CEO of a company, what do you do when you have trouble with your personal finances? You will try to do something to get money and [this may lead you to] start making the wrong decisions. Then [after losing money], you get desperate and you have nowhere to turn to but your company [for help].
“After all, it is one of the nearest sources of funds available to you and it’s very convenient to put your hand in [the jar]. But this could lead to messing things up in your company.”
Ng says cash flow is very important when it comes to both personal investments and running a business.
“When you are short of cash, you will have to borrow at a very high price. It will weigh down heavily on you if you are not careful.
“That’s why you should focus on doing something that generates cash. Don’t be distracted, and invest in other places only when you have extra money,” he says.
Having experienced three major financial crises (in 1987, 1997 and 2008), Ng says investors should always prepare themselves for a big market downturn. Doing so will help ensure their survival.
“More often than not, when there is a bull run in the market, people start thinking that it will continue forever. But when the music stops and the bear market comes, you are forced to sell your holdings at a hefty discount. That is when you will get into deep trouble,” he says.
Aiming for the ACE market
Danny Ng, managing director and CEO of Fibromat (M) Bhd, is submitting an application for the company to be listed on the ACE market by the end of this year or early next year.
He hopes to do this either through the board transfer framework for companies listed on the Leading Entrepreneur Accelerator Platform (LEAP) Market to be transferred to the ACE Market, which industry players expect to be released this year, or via a fresh listing.
“We are pursuing both paths concurrently. We will submit a new application to be listed on the ACE Market if everything is prepared and the transfer framework is not out yet. However, if the framework is out earlier, then we will use the framework.
“We are doing so as we assume that the extra cost to file a fresh application for the ACE Market is not much more [compared with using the transfer framework]. It is mainly only the fee to appoint a new adviser for the listing,” he says.
Ng says the ACE Market is much more liquid than the LEAP Market, which is open only to sophisticated investors. Listing Fibromat on the former will allow him to release some of his shares to a larger pool of investors in exchange for funding.
“We got some investors to support us [prior to listing on the LEAP Market]. But I told them if [the money was not used for its intended purpose] within a year, I would buy their shares back at a specific price. And I did. I wanted to be fair to them as they had helped me when I needed them.
“For now, I’m holding about 90% of the company’s shares,” he explains.
Ng adds that the company has identified various opportunities for growing its business but lacks the funding to do so.
“In addition to having several acquisition targets ourselves, we have also received offers to expand into the Philippines and Cambodia. However, we cannot do much yet with the pandemic still ongoing [and travel being restricted]. Plus, there is a [lack] of funds.”
He adds that Fibromat does not want to borrow from banks in such an uncertain economic environment.
If the plan to list Fibromat on the ACE Market by early next year does not materialise, Ng will consider selling a significant amount of his shares to international companies.
“We were talking to a French company earlier this year to sell them 70% of Fibromat’s shares. There was also a Japanese company that talked to us. So, we are not short of opportunities like these as we are probably the only listed company in the soil erosion control business locally. We also have a good reputation.”
For its financial year ended Dec 31, 2018 (FY2018), Fibromat recorded a healthy net profit of RM2.8 million. However, it suffered losses of RM3.07 million in FY2019, according to EquitiesTracker.com.
Ng says the losses are mainly due to an increasingly competitive market. In addition, there have not been many infrastructure jobs requiring soil erosion control products and services. Infrastructure projects such as the East Coast Rail Line and Kuala Lumpur-Singapore High Speed Rail have been delayed partly owing to the change in government. However, he is confident that Fibromat can win more contracts going forward as infrastructure projects “have begun to move”.
This year, the company has also been affected by the Covid-19 pandemic and the implementation of the Movement Control Order in March.
Ng says, however, that Fibromat is expected to be back in the black this year as it has sold its land and factory in Bukit Beruntung at a profit of about RM4 million. He has also consolidated the company, and shrunk and centralised its operations to be more cost-efficient.
“We should make about RM1 million in profit in the first six months of the current financial year. We should be making a good reversal by the end of this year. We want to show investors good numbers for our ACE Market listing,” he says.