It’s our lifestyle: Sheng Siong’s Lim Hock Leng on why Singapore’s mighty supermarket has Covid-19 and e-commerce beat
- The supermarket’s founder spills the beans on respecting Muslims, and a problem with China’s six-day work week
- He also gives his thoughts on what his only son Nigel Lin needs to do if he wants the top job
But in fact, according to Lim Hock Leng, one of three brothers who founded Sheng Siong more than three decades ago, what had really impressed the businessman was their sensitivity towards Singapore’s Muslims, who make up about 14 per cent of the city state’s 4 million local residents.
Lim said the supermarket took pains to section off the fresh and frozen pork section, and to arrange displays and the flow of human traffic such that a person heading to the seafood section would not have to walk past pork. Its two-storey outlet at Bedok Town Centre in Eastern Singapore, for example, tucks the pork section into a nook in the right corner of the supermarket’s entrance. Those not looking for pork would easily walk right past.
Even frogs, which are not halal – or permissible in Islam – are kept separately from the rest of the fresh and frozen seafood, demarcated clearly with a green board. Lim said he and his two brothers – who started the business in 1985 – learned these sensitivities as the business grew.
After all, the family’s roots are in pig farming, as Lim recounted in a rare three-hour interview with This Week in Asia. Typically, his brother the chief executive fronts media interviews about the business. Relaxed and wearing a dress shirt and trousers so he could head off to work after lunch, Lim described how his late father entered the pig farming world.
He was a handyman repairing pigsties who came across an ailing pig of an imported breed. He offered S$30 (US$22) for it and nursed it back to health with the traditional Chinese medicine drink Three Legs Cooling Water. Later, it was Lim Hock Leng’s brother’s sale of their excess pork in a provision shop that led to the three brothers – Lim, his second brother Lim Hock Chee the chief executive, and older brother Lim Hock Eng who is executive chairman – starting the first Sheng Siong store in the northern part of Singapore just as the country was phasing out pig farms.
Today, Sheng Siong is a household name in Singapore with more than 60 outlets across the city state and two in Kunming, the capital of Yunnan province, which has a small Muslim minority of about 700,000 people. Sheng Siong Group has been listed on the Singapore Exchange since 2011, its share price rocketing from S$0.33 during its initial public offering to S$1.51 as of March 22. Last year, even as many businesses were battered by the pandemic distancing measures and lockdowns, Sheng Siong did brisk business. The group’s net profit last year was S$139.1 million – 83.7 per cent higher than what it reported for 2019 – and the business made the news for giving employees bonuses of up to 16 months’ pay.
The family’s fortunes have risen alongside. The Lim brothers grew up in an attap house – a traditional village house made from the mangrove palm – but have since moved into massive bungalows. Trading up from a 5,000 sq ft house in northeastern Punggol, in 2015 Lim Hock Leng bought a 33,700 sq ft plot of land with a colonial house in central Singapore for S$35 million then spent another S$32 million adding a modern building to the land that houses his in-laws, children and grandchildren. The family traces its roots to Anxi county in the southern Fujian province of China. They keep in touch with extended family who are there, with their relatives even displaying an ancestral tablet for Lim’s late father.
CHINA EXPANSION?
After opening the two stores in Kunming, one in 2017 and the other in 2019, is Sheng Siong now set on a China expansion? Surprisingly, Lim said no. “We’re still unsure if we can expand in that market,” said Lim, citing difficulties hiring people willing to work six days a week in a supermarket. He said the two stores were a way of dipping the family’s toes in the water and they had found the temperature “not ideal”; the 26 staff sent from Singapore to set up the businesses in Kunming have not been able to return home because of the problem of finding Chinese replacements.
[In Malaysia] even if people come and steal from you, you wouldn’t dare to chase after him
How Sheng Siong’s local focus during Covid-19 lifted its fortunes
It is inevitable that Lim and his brothers take a more conservative approach to expanding the business, he said. “We started it ourselves, so we’re worried and we’re more careful. Outsiders who have gone to business school may want to open a new store every two to three days, but it’s different when you’ve grown the business by figuring your way up,” he said.
Lim said their public listing also unintentionally led to more competitors in the market. Sheng Siong’s business model was to provide affordable groceries in the housing estates of Singapore. So instead of opening stores in shopping malls, they opened them within public housing estates. Lim said being listed meant they had to disclose earnings and that led to people noticing there was money to be made in the supermarket business. Competitors entering the market pushed up the prices of retail shops in public housing estates.
“Up to S$18 per square foot – that was the price of shops in Orchard Road in the 90s,” he said. So far this year, they have not balloted for a new store space but the group did buy over a store from a Dairy Farm outlet in the eastern part of the island that exited the market.
The company is also keen to buy distressed businesses. “After Covid-19, at the end of this year, we’ll see which businesses cannot go on but are profitable,” he said. Some areas Sheng Siong are interested in include medical treatment and products such as supplements.
Singapore’s online grocers see ‘explosion in demand’
Alfie Yeo, DBS Group Research analyst, said Sheng Siong was a “clear beneficiary” of Singapore’s two-month partial lockdown last year “with people staying home and the panic buying prior to that”. What he found appealing about the stock was its earnings resilience, net cash, strong cash flows, and decent dividend yield of 3.5 per cent. Yeo said while he expected its earnings to take a slight dip this financial year, “nonetheless, we see sales remaining elevated as people continue to work from home and large scale events and activities have yet to resume”.
Thirty-six years in for Sheng Siong and it is no longer just the three brothers running the show. The second generation has stepped in. Lim’s only son Nigel Lin, 32, joined the business three years ago, and his older brother’s daughter and two of his second brother’s sons are also working at Sheng Siong.
Lim said the brothers were watching to see who in the younger generation had a nose for the business, or who was suitable for the various portfolios within the company. “My son can take over my portfolio, and if he can do it well he can go take over the business. But if he can’t even handle my portfolio, then he cannot rise to the top,” said Lim.
Lim’s plan was to groom his son for five years, then observe him for another five. “And maybe 10 years later I can retire,” he said.
The brothers, though, have high expectations of the second generation. Lim said he would not encourage the second generation to head the company – unless they were as serious about it as his brother Hock Chee, the current chief executive.
“If you can’t do it, it’s better to let someone else take over, hire an outsider. Because when talents come in from outside the business, they are more daring and willing to take risks, they are able to look at things from a business angle,” he said.
