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Things were really difficult for EcoFirst Consolidated Bhd for several years prior to 2011. One of its shopping malls — South City Plaza in Seri Kembangan, Selangor — was bleeding red ink while the construction of its second mall — 1Segamat in Segamat, Johor — had stalled after the 1997/98 Asian financial crisis.
The company had amassed RM120 million in debt and its coffers were running dry. It needed a miracle to prevent further losses. Fortunately for EcoFirst, turnaround specialist Datuk Tiong Kwing Hee came into the picture.
In December 2008, Tiong was approached by EcoFirst’s main shareholders to helm the company. In January 2009, he was appointed group CEO and executive director. “The company was recording losses for seven to eight years straight and needed a turnaround. When I saw the company’s performance, I took it as a challenge,” Tiong tells City & Country.
In FY2011, the company successfully posted a net profit of RM8.5 million.
Established in 1973 and listed on Bursa Malaysia in 1984, EcoFirst started out as a diversified group with business interests in oil drilling, plantations and engineering works. Over the years, it dropped some of these business segments and took on others, and is now involved in property development, construction, network marketing and organic farming. Currently, the group’s main profit contributors are property development and construction.
Tiong was no stranger to reviving companies as he had done it before to Mercury Industries Bhd, whose subsidiaries manufacture and market putty, hardeners, undersealers, paints and other automobile-related products.
Mercury Industries was on the verge of being de-listed by Bursa Malaysia when Tiong was brought into the company in 2005. It took him just six months to turn around the company and improve its financials from a net loss of RM2.08 million in FY2005 to a net profit of RM7.25 million in FY2010. Tiong continues to oversee the operations of Mercury Industries as its executive director.
Tiong, 53, holds a master’s in business economics from the University of Miami. His first job after graduating was handling the corporate finances of a company owned by a timber tycoon. From there, he learnt the skills to rescue ailing companies.
The turnaround
Since 2009, Tiong has been working on a strategy to revive EcoFirst’s two malls.
South City Plaza was one of EcoFirst’s first projects and was completed in 2003. Its other completed project is South City Apartments, which is also located in Seri Kembangan. Launched in 1996, South City Apartments is a 9.7-acre leasehold project with a GDV of RM155 million. It comprises serviced apartments and shopoffices. The development is fully sold and occupied.
However, South City Plaza did not do as well. “Our location was good, but the mall didn’t draw in the crowds,” says Tiong. The mall offers five levels of retail space with 331 shoplots. It has a gross built-up of 1.2 million sq ft and a net lettable area (NLA) of 800,000 sq ft.
“In 2009, I decided to rebrand South City Plaza as an edu-mall with universities and colleges setting up shop there,” explains Tiong. “I managed to get SEGi University College, the International College of Health Sciences (ICHS) and Asia-Pacific University College of Technology and Innovation (UCTI) to take up tenancy in the building.”
According to Tiong, as at this year, the mall hosts almost 4,000 students, including those from skill training institutions such as Akademi Antarabangsa Clipso and Clipso Hair Art Saloon. The academic institutions take up 191,000 sq ft of the mall’s NLA.
Tiong is also upgrading the mall’s facilities with a 12-hall cineplex, courtesy of international cinema chain BIG Cinemas Lotus Five Star Sdn Bhd. There are also plans for a family karaoke centre. If the plans are approved, the RM10 million upgrading works will begin in April this year and once in operation, the mall is expected to draw 70,000 people a month.
Tiong also has another strategy in mind — developing two apartment towers with 416 units above the mall.
Dubbed The Academia @ South City Plaza, the apartment project was launched in January 2010 and has a GDV of RM105 million. The 13-storey Block A houses 285 apartments while Block B has 13 storeys and 131 apartments.
Currently, some 98% of The Academia has been taken up with only 20 units left for sale in Block B. The units in Block A have built-ups of 566 to 987 sq ft while those in Block B are 691 to 1,241 sq ft in size. Prices for the units range from RM176,800 to RM500,000.
“When we came up with the development, we offered an 8% guarantee on rental returns. To do so, we struck a deal with a university nearby,” Tiong explains. “I approached Universiti Putra Malaysia and it agreed to rent the entire two blocks for 2,000 international students.”
1Segamat
Prior to Tiong’s entry, EcoFirst had already started work on the 1Segamat project in Segamat, Johor, that comprised the 1Segamat mall and the Segamat bus and taxi terminal. However, midway through construction, the Asian financial crisis struck and the development ground to a halt due to a lack of funds. The terminal, however, was completed. By the time Tiong took over as group CEO, 1Segamat mall was an abandoned structure.
Located in Jalan Stesen, the mall comprises three levels of retail shops with a gross area of 450,000 sq ft and an NLA of 280,000 sq ft as well as a 2-storey car park. The development is linked to the Segamat bus station and taxi terminal, promoting better access to the mall via public transport.
Since Tiong came on board, some RM36 million (derived from profits from EcoFirst’s other business segments) has been pumped in to revive the construction of the mall.
Tiong also added an eight-hall cineplex at a cost of RM6.5 million. “We needed a pull factor so we decided on a cineplex. But before we officially opened 1Segamat mall [which was completed in December 2011], Lotus Five Star, the manager of the cineplex, decided to launch the cineplex first on Dec 10 last year,” he says. “The facility received about 50,000 people during the first week of its launch, which translates into 7,000 people a day.”
Chinese New Year will see the official opening of 1Segamat mall and Tiong expects it to rake in about RM6 million to RM7 million a year in profit. “I am very bullish about the mall. It is the first modern shopping complex in the area. 1Segamat has a rental space take-up of 85% with only 15% left and by the time we officially launch, the 15% would have been taken up.”
Other developments
Besides the two malls, EcoFirst is developing a 200,000 sq ft retail centre in Ipoh called Taipan. The development has four phases with an estimated GDV of over RM200 million. The retail units in the first and second phases are sold out along with the non-bumiputera lots in the second and third phases. The units are 22ft x 65ft to 26ft x 65ft in size and are priced from RM750,000 to RM1.3 million. The first phase was launched in December 2010.
EcoFirst is collaborating with property development and management group Andaman Property Management Sdn Bhd to market the Taipan development. EcoFirst and Andaman have a common shareholder and the latter is also the project manager of The Academia.
Future plans
As the company performed much better in its recent financial year, Tiong is keen on developing more land parcels, particularly one in Melaka.
He believes the 21-acre tract in Tanjung Kling has the potential to be turned into a mixed-use development of commercial and residential properties.
Venturing out
While EcoFirst is slowly establishing itself on the local property scene, Tiong says there are plans to venture outside the country.
“I am very interested in Laos. I’ve gone there a few times and I quite like the property scene,” he remarks. “There are pockets of prime land in the Vientiane city centre and with the progressive development of roads and a new airline service, connectivity within Laos is much better, thus promoting the country even further.”
EcoFirst is also moving beyond its traditional businesses, Tiong says, adding that the company is going into mining. “We have an iron ore mine in Kalimantan and I am looking for other suitable mines. We found a new iron ore mineral called iron sand in Kalimantan and I am confident that it will become one of the group’s main profit contributors in the future.”
Clearly, the decision of EcoFirst’s board of directors to appoint Tiong as group CEO to put the company back on its feet has paid off. With both malls in a steady position and with new revenue streams on the horizon, the company is looking at brighter days ahead.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 893, Jan 16-22, 2012
