This article first appeared in The Edge Malaysia Weekly on September 25, 2023 - October 1, 2023

AIMING to be a big fish in a bigger pond, Lim Seong Hai Capital Bhd (LSH Capital) — the largest LEAP Market-listed company on Bursa Malaysia — is poised to migrate to the ACE Market.

When LSH Capital floated its shares in July 2021, it was valued at merely RM46.16 million. Back then, the company was targeting a market capitalisation of RM1 billion within 10 years.

Fast forward to today, LSH Capital’s market capitalisation has grown over 13 times to RM621.6 million at the closing price of 88 sen last Wednesday. Suffice to say, if the momentum is maintained, the company will not have to wait until 2031 to hit the RM1 billion mark.

LSH Capital’s non-executive chairman and major shareholder Tan Sri Lim Keng Cheng believes the ability to attract a wider investor pool by listing on the ACE Market would definitely augur well for the company, with improved liquidity and more opportunities to raise funds when required.

“We are currently working with our advisers to chart out the next phase of our growth and the transfer of our listing to the ACE Market is in our plans. We are on the right track to achieve the RM1 billion market capitalisation,” he tells The Edge in an exclusive interview.

While LSH Capital is now focused on delivering the projects that have been secured, Keng Cheng says the group is also planning for future property developments such as the Lake Side Homes and LSH Sentul Ria.

“The next catalyst for growth will be when we launch Lake Side Homes and LSH Sentul Ria. Coupled with the business injections (that we had undertaken since listing), our company is expected to maintain the current level of revenue and profit after tax.

“We are also looking for further opportunities for development potential and also tendering for new construction and construction-related services and solutions to maintain the order book level,” he elaborates.

Lake Side Homes, which has an estimated gross development value (GDV) of RM1.19 billion, is expected to be launched by the second half of next year. The mixed-use development project in Sungai Besi consists of 1,183 condominium units, 593 units of Perumahan Penjawat Awam Malaysia (PPAM), and 593 units of Rumah Mampu Milik Wilayah Persekutuan (Rumawip).

Before that, LSH Sentul Ria, a 268-unit affordable condo project with a GDV of RM152.7 million, will be launched in the third quarter of this year. Located in Jalan Sentul, the 21-storey building will be built next to Masjid Al-Hidayah and strategically situated near the DUKE highway, which is operated by Ekovest Bhd.

Interestingly, Keng Cheng is also managing director of Ekovest. He owns an indirect stake of about 4% in the Main Market-listed civil engineering firm, held via Lim Seong Hai Holdings Sdn Bhd (LSH Holdings). His uncle, Tan Sri Lim Kang Hoo, is the group executive chairman and single largest shareholder of Ekovest with an equity interest of 30.8%.

Property development is a new business for LSH Capital as it just diversified into this segment in April 2023. Up to March 31, 2023, the company had three business segments: distribution of building materials, lighting products and mechanical and engineering products and services; selling of hardware tools and machinery; and construction services. 

Meanwhile, LSH Capital saw its earnings jump more than five times to RM41.81 million in the financial year ended Sept 30, 2022 (FY2022), up from RM7.93 million a year ago. The group continued to generate a net profit of RM21.67 million in the first half ended March 31, 2023 (1HFY2023).

The stronger financial performance was mainly driven by LSH Best Builders Sdn Bhd (LSHBB), one of the group’s main operating subsidiaries, which offers construction and construction-related services and solutions.

The Lim Seong Hai Group (LSH Group) was founded in 1966 by the late Lim Seong Hai under the name Lim Seong Hai Construction & Co.

Continuing the vision of Seong Hai, who passed away in 1976, the LSH Group — including the listed vehicle LSH Capital — is now run by his four children, namely Keng Cheng, Datuk Lim Keng Guan, Jaclyn Lim Pak Lian and Alex Lim Keng Hun.

At LSH Capital, Keng Guan is the executive vice-chairman, Pak Lian is the group managing director and Keng Hun is managing director of the machinery, hardware and tools division.

LSH Capital is 76.94%-controlled by Lim Seong Hai Resources Sdn Bhd, a wholly-owned unit of LSH Holdings, in which the four siblings hold 25% equity interest each. Meanwhile, they also have a direct stake of 4% each in LSH Capital.

“I designed the shareholding structure as such so that nobody, including myself, could simply do what he or she wants. Under the current structure, for every major decision that we are going to make, at least three out of the four shareholders must say yes. Even if two shareholders say yes, it’s just 50% and still not enough [to pass the resolution]. In other words, you cannot say LSH Capital belongs to me,” Keng Cheng stresses.

Today, LSH Group is an integrated group with core interests in property development, construction, financial services, real estate, heavy machinery leasing, building materials and the trading, retailing and manufacturing of electrical supplies.

It is learnt that 70% to 80% of LSH Group’s businesses have been injected into LSH Capital.

Keng Cheng recalls that LSH Capital was incorporated in November 2020 during the Covid-19 pandemic, before it was listed on the LEAP Market in July 2021. “At that time, only Lim Seong Hai Lighting Sdn Bhd (building materials and lighting products supplier) and Knight Auto Sdn Bhd (machinery, hardware and tools supplier) were injected into LSH Capital. Revenue generated by these two main operating units had provided a stable base for LSH Capital’s growth.”

Three months after the listing, LSH Capital saw an opportunity for vertical integration and expanded into the construction business by acquiring LSHBB.

Subsequently, LSH Capital in April this year acquired building construction contractor Astana Setia Sdn Bhd while diversifying into property development. 

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