Paul Lim Ooi Joo, who has spent almost four decades in the construction industry, has seen how money can be a double-edged sword in life and in business. Some people invest their cash wisely and thrive in life while others fall prey to temptation and lose sight of their goals before they crash and burn.
The 67-year-old managing director of construction firm Inta Bina Group Bhd has seen first-hand how money can be used to sensibly grow one’s wealth. For instance, in the capital-intensive construction industry, a company with enough cash can buy better equipment and be more cost-efficient over the long term. It can also invest in assets such as tower cranes, passenger hoists and aluminium formworks to bid for more complex projects that fetch higher profit margins, he says.
Without naming any names, Lim gives the example of a public-listed construction company that always has sufficient cash in hand and has deployed its capital wisely over the years. At times, it has even enjoyed double-digit profit margins — almost double the industry average. As a result, it has garnered a lot of attention from analysts and fund managers.
“The company’s performance is exceptional and uncommon. The industry average is only about 5% to 6%,” he says.
One day, Lim met up with the company’s CEO and asked him what the secret of his success was. The CEO shared that the company had a large cash pile with which to purchase raw materials. By paying cash up front, it was able to reduce its raw material costs by 2% to 3%.
The company also had a low level of debt and minimal interest payments, which contributed to its high cash levels. With its superior earnings and reputation, it was able to take on more projects, which further lowered its operating costs.
“I admit that I have things to learn from that CEO,” Lim says humbly.
Beyond the construction industry, he has observed that many businesses do not manage their cash holdings well after listing on the stock exchange. Instead, the business owners spend recklessly to chase short-term gains. As a result, many companies fail within a few years.
Lim says, “The question I had for Datuk Bill Tan, managing director of M&A Securities [the adviser, sponsor, underwriter and placement agent of Inta Bina’s initial public offering], back then was, ‘You helped many companies to get listed. But some failed in the next three to four years. Why?’
“He replied that it was because their wealth had multiplied. And they leveraged that wealth to make other investments in their pursuit of quick gains and profit. They did many things and lost sight of their core business. They eventually forgot about their core business and their companies started to slide.
“That is why I continued to invest in my company’s core business after our listing exercise. On a personal level, I only invest in properties launched by some of my clients [property developers] and hold Inta Bina’s shares. I do not touch any other investments.
“I do not want to be distracted by additional wealth and other investments. I do not want these to make me greedy and lose sight of my core business.”
Inta Bina, a construction firm with a track record of more than 30 years, has completed at least 127 building projects with a contract value of about RM3.1 billion. Its public-listed clients include Eco World Development Group Bhd, Gamuda Bhd, Mah Sing Group Bhd and Engtex Group Bhd.
Inta Bina was listed on the ACE Market in May 2017. Its listing was transferred to the Main Market two years later. On July 20, its shares were trading at 22 sen apiece, giving the company a market capitalisation of RM115 million.
Lim’s upbringing has kept him grounded all these years. He hails from Pulau Pasir Hitam in Taiping, Perak — an island with no electricity or water supply until today. “We did not have an electric generator and our water supply was the rainwater we collected in a tank,” he says.
The son of a fisherman, Lim is the fifth of eight siblings. To supplement their household income, his mom would sometimes take a boat to Taiping to buy fabric, which she would sew into shirts before selling them to the other islanders.
Lim recalls a time when his family only ate porridge with soy sauce for days. “That was the toughest time of our lives. It reminds me not to take things for granted,” he says.
Lim lost his dad when he was 12 years old, so he owes his success in life to his siblings. For instance, his oldest sister and second brother had to sacrifice their opportunity to pursue higher education to support the family.
When Lim finished secondary school, his oldest brother SC — who had worked hard to become general manager of Lam Soon Group in Singapore — sponsored his civil engineering studies at the University of Saskatchewan in Canada. SC also provided him with monetary assistance when his business was going through tough times.
In the 1990s, Lim ran a small construction firm and needed a licence from the local authority to tender for government projects. As his company lacked the necessary track record to apply for the licence, Lim decided to take a risk and pay a licence holder “a few hundred thousand ringgit” to ride on his licence.
“The person ran away with the money and my company nearly collapsed. I had to leave the company, find another job and save up funds before I could return to the company. My oldest brother helped me with his hard-earned savings,” says Lim.
During the 1997/98 Asian financial crisis, SC came to his help again. “We faced severe cash flow problems when interest rates spiked. Our suppliers chased us for payments while banks pulled their loans. I had to remortgage my house to assure them that I was trying my best to pay them back,” says Lim.
“It was during this time that my oldest brother offered to help me. He provided me with a big sum of money without any collateral because he trusted me.”
In fact, SC continues to be the central pillar of the family. “He was our source of income after our dad died. He supported my siblings and I,” says Lim.
“He even paid for my younger brother’s and sister’s studies overseas. Can you imagine that kind of brotherly love?”
Lim says it is this love and support that has kept him grounded over the years. It has also taught him that money, while important, is not the most important thing in life. In fact, he says, having an education is just as important as having money. And he is particularly grateful to his mother for this lesson.
“My mom was illiterate. She could not even write her name. But she was a visionary who understood the importance of education. It was because of her that we were well educated and that has changed our lives,” says Lim.
“She came to this realisation one day, when she travelled to the main town in Taiping. There was a businessman who tried to charge her excessively when she was shopping for clothes. Luckily, she calculated well and was not swindled. That incident prompted her to think about the importance of education.
“She thought, what if her children did not receive proper education and were cheated by such people in the future? She found out that the answer was education.”
As one becomes successful, the opportunity and temptation to make a quick buck increases. “Yes, there were times when I faced such temptations. But I decided not to pursue them,” says Lim.
For instance, he once received a phone call from the owner of a construction company who wanted to “borrow” the Inta Bina name to manipulate the tender of a construction project. “A developer was looking for several construction companies to tender for a project. The person who called wanted to use his connections to manipulate the price and result of the tender. He told me that he would give me money for the tender and that I did not need to do the job. I only needed to ‘lend’ him the name of my company,” says Lim.
In the end, he rejected the offer as it did not sit well with him. “How can I do such a thing to fulfil his greed? He called me later and told me that I was stupid to reject his offer. He said it was free money,” says Lim.
“I said that is up to you to say. I just want to sleep well at night. There have been many such instances, but I have chosen not to participate in them.”
His Christian faith has also helped to keep him on the straight and narrow. He meets his senior pastor, who serves as his mentor, every month.
“It is important to have someone with more experience and wisdom to guide you on the right path. You are faced with all kinds of choices to make every day. Making the right decisions depends on your values. Sometimes, you are faced with temptations and you need a mentor to check on you and hold you accountable for your choices,” says Lim.
After all, money is just a means to an end. “Money is essential and plays a big part in our lives. But many people lose themselves or compromise their integrity for money,” he points out.
“As a husband, I must try my best to provide a comfortable life for my wife. As a father of three, I want to provide my children with the best education. As an employer, I want my employees’ well-being taken care of. So, money is just a means to an end.”
At the current stage of his life, Lim prioritises the need to do good for society rather than accumulating wealth. “People have different goals in the different stages of their lives, just like how things change in different seasons. For now, I want to influence people, especially the next generation, to help them make better choices and contribute to society. This is my calling,” he says.
Venturing into infrastructure projects
Since the middle of March, when the government imposed the Movement Control Order (MCO), Inta Bina Group Bhd managing director Paul Lim Ooi Joo has spent two hours a day on a treadmill to keep himself physically and mentally fit to face the unprecedented challenges before him.
“The economic challenges posed by this pandemic could be larger than those caused by the 1997/98 Asian financial crisis. Businesses have not been allowed to operate for months. Today, as I step out of my office, the shops are closed and businesses are struggling,” he says.
The real challenge will come in November, when banks lift the moratorium on loans. “We have yet to see if more businesses will fail once they start paying their loans again,” says Lim.
Inta Bina recorded a revenue of RM66.24 million and profit before tax of RM4.06 million in the first quarter ended March 31, a year-on-year decline of 32.81% and 49.23% respectively.
Lim says the company will suffer a loss in 2QFY2020, its first quarterly loss since it was listed in 2017. “Like many businesses, we have had no jobs for two months. It is something that we must deal with.”
On his first day back at the office, he had a meeting with his management team to address their fears and anxiety as well as provide them with direction. He also formed a crisis management team to handle unforeseen circumstances.
In May, the company had to screen about 1,800 workers for Covid-19 before it was allowed to resume its construction work. “The screening cost us about RM500,000. We have about 400 workers and the rest of them work for our subcontractors, who did not have the money to pay for the screening. So, we had to pay for the screening first and claim the money back from them later,” says Lim.
Fortunately, Inta Bina had enough cash for such an expense. The company has RM42.53 million in cash and securities on its balance sheet, according to the company’s 1QFY2020 financial results. The results report also showed that the company was in a net cash position of RM3.28 million during the previous corresponding period.
Lim believes that the company will see an earnings recovery in the third quarter of the year, provided that there is no second wave of Covid-19 infections. “A vaccine is crucial for the economy,” he says.
He adds that Inta Bina has an order book of RM600 million to sustain it until the second quarter of next year. “We also have a tender book of RM5 billion. Based on last year’s success rate of 8%, we should be able to rope in more contracts and pull through this crisis.”
Despite the setback caused by the ongoing pandemic, Lim continues to chart a path forward for the company. He aims to achieve RM500 million in revenue over the next three years and RM1 billion in five to six years.
Lim is exploring a joint venture with another company to bid for government infrastructure projects. “I am already looking into this and hope to start by this year. I just visited the Light Rail Transit and Mass Rapid Transit [to understand better how they are built],” he says.
“I am an engineer by profession and have built bridges, dams and roads. The LRT and MRT projects are not too hard to build. The challenge is more about the kind of equipment and machinery you need to have.”
Lim is also looking for construction projects outside of the Klang Valley as about 91% of the company’s projects are concentrated in this area, according to its 2019 annual report. “We may move into growth areas like Penang,” he says.
Last year, Lim made a bid to become one of the main contractors for Forest City, an integrated residential development in Johor. The master developer of the project is Country Garden Pacificview Sdn Bhd — a joint venture between Country Garden Holdings Co Ltd (60%) and Esplanade Danga 88 Sdn Bhd (40%).
“We did not get the project as it was very hard to compete with Chinese construction companies that can source raw materials at a low cost from China. We can source raw materials from China too, but we prefer to buy these from local manufacturers to support them,” he says.
Lim aims to build more high-rise buildings that could contribute to better profit margins. “About 60% of our projects are high-rise buildings while the rest are low-rise. The ratio will become 70:30 going forward,” he says.