A firm foundation for success

Thu, Oct 07, 2010 The Business Times

A firm foundation for success

A commitment to knowledge of the industry and customers needs that has made Sin Heng the company what it is today.

Thu, Oct 07, 2010
The Business Times

By Grace Lin Shuling, Teo Zhen Jie and Wang Zhao Rong

WHILE other children played in their free time, Don Tan spent his childhood on late-night trips to job sites with his father to learn about cranes - Sin Heng Heavy Machinery's bread and butter.

And it is this commitment to knowledge of the industry and its customers needs that has made the company what it is today.

Founded in 1969 by Mr Tan's father, Tan Ah Lye, Sin Heng Heavy Machinery was a sole proprietorship that owned and operated cranes. Today, Sin Heng is a publicly listed company specialising in the renting and trading of cranes and aerial lifts in addition to undertaking turnkey engineering projects.

With a fleet of more than 80 cranes and 200 aerial lifts available for rental on top of a wide network of suppliers and customers, Sin Heng is one of the industry leaders in Singapore. It also has a growing presence in both Vietnam and Malaysia.

Sin Heng's success speaks for itself. It is well-established in the infrastructure and geotechnical sector and has supported prominent projects such as Newton Circle Flyover - one of the first dual carriage flyovers in Singapore, Singapore Flyer, the MacRitchie viaduct, and many others located all over Singapore. Today, Sin Heng plays a critical role in supporting Marina Coastal Expressway, Resorts World at Sentosa, and Marina Bay Integrated Resort.

As a testimonial of its success, Sin Heng recently came in third in the 2009 Enterprise 50 competition.

Sin Heng is able to understand and respond to its customers' needs because of its in-depth knowledge and expertise. 'Cranes are not something you read and study about in books,' says Mr Tan. It takes years of experience to understand the technical specifications and what each crane is capable of. Mr Tan's expertise in cranes started more than 30 years ago when he would accompany his father to job sites and the senior Tan would instruct Mr Tan to watch and learn.

'Old school' beliefs

Mr Tan shared with us that his father, Tan Ah Lye, imparted to him the philosophy of financial prudence: to buy only when you have the capability to pay off in minimal time.

Over the years, Mr Tan learnt the importance of not over-gearing the business and taking a more gradual and steady approach to grow. Indeed, this 'old school' philosophy has paid off for Sin Heng. During the recent global downturn, the company's strong balance sheet and low gearing helped the company steer through the tough times with relative ease.

For the financial years ended 30 June 2009, the company achieved commendable profits of $22 million. Sin Heng has excellent liquidity management, as evidenced in its ample reserves and minimal bank loans. Its cash and bank balances account for approximately 25.2 per cent of the total current assets compared with an industry average of between 5-10 per cent.

As a result of its prudent financial management, Sin Heng can remain resilient in times of crisis. It is also well-placed to take counter-cyclical steps to strengthen its position during economic downturns. For example, during the 1997 Asian financial crisis, while competitors were holding back capital expenditure, Sin Heng purchased some well-valued cranes and settled them in full promptly. When the market recovered, the company was able to capitalise on these investments and enjoyed high returns on them.

Wise money management was not the only value that Mr Tan's father taught him. Mr Tan shared with us that honesty and sincerity are two other key values that he learnt from his father and these values form the cornerstone of his business. As Mr Tan puts it, 'You should only promise what you can do. These might be 'old school' Chinese values, but they are beliefs that are still very relevant today.'

Sin Heng demonstrates its core values by always delivering its service on time. Mr Tan believes that it is important to be punctual and prompt. It is because of this service reliability that customers trust Sin Heng deeply and are willing to return to the company time after time.

These 'old school' beliefs, coupled with Sin Heng's self-rejuvenating management, lay the foundation for success.

Ready to scale new heights

Today, Sin Heng has a presence in Singapore, Vietnam and Malaysia and operates a young and comprehensive fleet of equipment serving many blue-chip customers in various industries.

However, the company is not resting on its laurels.

Sin Heng is looking to expand beyond its existing markets and Mr Tan wants to eventually grow Sin Heng into an international brand with footprints around the globe. Becoming publicly listed was the first step in that direction. On Feb 3, 2010, the company launched an IPO on the Mainboard of the Singapore Exchange. Sin Heng believes that listing on a stock exchange provides a platform to enter foreign markets because 'people are more likely to do business with you if you are a publicly listed company with an established corporate profile', says Mr Tan. Sin Heng is exploring to expand its business through acquisitions, joint ventures, and strategic alliances. It will focus on the South-east Asian and the broader Asian markets in the coming years.

To do so, Sin Heng plans to leverage on its competencies in its two core businesses, namely, rental and trading of cranes and aerial lifts.

The writers are students of NUS Business School.

This article was first published in The Business Times.