This article first appeared in The Edge Malaysia Weekly on March 6, 2023 - March 12, 2023

PTT Synergy Group Bhd — formerly Grand Hoover Bhd — has been undergoing a change since March 2021, when new controlling shareholders took over the reins.

Over the past two years, the Main Market-listed building materials supplier has been reviving its construction and property businesses, which had been largely dormant for a decade.

Today, PTT has transformed from a trading-centric firm into an integrated construction and property group specialising in ­industrial development and industrial services.

 In his first interview since taking over Grand Hoover, PTT founder, joint-controlling shareholder and managing director Teo Swee Phin is quick to stress the group’s “clear” earnings visibility in the next three to five years.

“PTT has a gross development value (GDV) of around RM700 million in industrial development, with earnings set to come in from the next financial year ending June 30, 2024 (FY2024) onwards. By FY2026/27, our target profit is estimated at RM50 million,” the 45-year-old says, eager to touch on PTT’s two major industrial projects.

The first one is located at Sime Darby Property Bhd’s Elmina Business Park in Sungai Buloh, Selangor, and the second at Tropicana Corp Bhd’s Tropicana Industrial Park, Iskandar Malaysia in Pontian, Johor.

“We have engaged with a large client to finalise a lease agreement for one of our industrial projects, as we prioritise securing tenants before commencing building operations. Our value proposition is to enhance our clients’ cost efficiency, particularly in the fast-moving consumer goods (FMCG) sector,” he elaborates.

Teo emphasises that PTT is currently focused on industrial development as its key synergistic pillar and core competence, with a built-to-suit solution that caters exclusively to clients’ needs.

For instance, it is working with a potential client to build an Automated Storage and Retrieval System (ASRS), as the group intends to rent out its industrial properties based on palletised position instead of charging a fee per sq ft.

Teo reiterates PTT’s goal of being a one-stop solution provider that makes it the preferred developer for highly agile and efficient set-up of industrial operations. Moreover, by leveraging its in-house construction arm, the group aims to obtain cost synergies that translate into lower overall costs for its buyers.

“We are actively looking for strategic acquisitions to build the entire ecosystem for clients in the industrial sector, while creating additional value for them. We hope to achieve cost savings for manufacturers through better solutions, and to reduce storage costs,” he says.

At the same time, PTT also owns land bank in Mantin, Negeri Sembilan, and Kulim, Kedah, both of which are vacant and ready for development.

“The Kulim land bank is the largest, covering 125 acres, and is ready for development. These are inherited (from Grand Hoover) and ready for utilisation, with the potential for residential development,” says Teo.

PTT, then known as Grand Hoover, saw a change of ownership between 2020 and 2021.

Aim Tetap Teguh Group Sdn Bhd (ATTG) — jointly owned by Teo, his elder brother Teo Swee Leng (PTT deputy chairman), and Datuk Abd Rahim Jaafar (PTT executive chairman) — surfaced as a substantial shareholder of the company with a 17.07% stake in October 2020.

Subsequently, the trio joined the board in March 2021. At the same time, Sim Cheng Young, who was a major shareholder of Grand Hoover, resigned as group managing director.

Following a rights issue exercise, which raised RM30 million in September 2021, ATTG became the controlling shareholder of PTT with a 57.91% stake.

Meanwhile, Sim, who had been divesting shares since February 2021, ceased to be a substantial shareholder in September 2021 due to the dilution in shares post rights issue.

Teo says the change in ownership was prompted by the previous management’s family’s desire to exit the company for personal reasons.

“Grand Hoover had been looking for the right successor to take over the company, and the Sim family, who eventually exited the company and are no longer in the property business, found us to be a suitable fit. Back then, Grand Hoover was a low-gearing company with strategic land bank assets waiting to be capitalised,” he explains.

PTT staged a turnaround with a net profit of RM8.41 million in FY2022, compared to a net loss of RM1.09 million a year ago. The group continued to register earnings of RM5.97 million in the first half ended Dec 31, 2022 (1HFY2023).

Year to date, shares of PTT have gained 18%, closing at RM1.19 last Thursday, which translates into a market capitalisation of RM107.1 million.

The counter is currently trading at a historical price-earnings ratio (PER) of almost 10 times versus the industry standard average of around 17 times. Teo says the company has no share price target, noting that its PER is determined by the market.

“We are prioritising the building of strong fundamentals for our businesses. Our company’s three business pillars are currently contributing profit, and we are not too focused on share price. Instead, we prefer investors to gauge our company’s performance. Our focus is on maintaining good growth for the bottom line,” he stresses.

Teo reveals that PTT is considering the implementation of good dividends going forward. However, the company also has to ensure the strength of its operating cash flow and balance sheet before setting a dividend policy.

Compared with other conventional warehouse logistics peers, Teo says PTT is more focused on built-to-suit solutions for industrial development, which sets it apart from its competitors.

“We provide a total solution which includes ASRS that significantly reduces our clients’ warehousing cost, whereas Tiong Nam [Logistics Holdings Bhd] is more into third-party logistics business,” he comments.

He says PTT is also among the largest earthworks and infrastructure contractors in Malaysia.

“We have one of the largest fleets of machinery in the country. We are a leading player in earthworks and infrastructure contracting. Our company has the capability to take on major infrastructure projects for a range of sectors, including township developers and government agencies,” he says.

Teo says PTT is the only total earthworks solutions provider in its market, although it does share some similarities with AME Elite Consortium Bhd.

“But I think PTT should be the only one with this type of end-to-end industrial solutions when all of its services are combined.”

According to Teo, PTT is committed to promoting environmentally sustainable practices and has embarked on several initiatives to reduce its carbon footprint, one key focus being the adoption of electric vehicles (EVs).

“We have partnered with Sany to bring in EV trucks, and our target is to use the EV prime movers in the upcoming months. In addition, we are planning to install charging stations in Elmina Business Park, further encouraging the use of EVs,” he says, adding that PTT’s long-term goal is to have up to 200 units of EV trucks in multiple stages.

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