Page 42 - Forbes - Asia (September 2018)

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FORBES ASIA
FAB 50 — PRESS METAL
oon Poh Keong knew what
he had to do, but the risks
were immense. He was
betting his entire company
Kon a bold plan to build a
factory in China and invade the mainland
aluminum market. But Chinese competitors
were killing his Malaysian outit, leaving
him little choice. “We couldn’t compete with
them,” he says.
So Koon spent $24 million to buy land
and build a plant outside Foshan, Guang-
dong. It was 2005, and that sum equaled
the entire value of his listed company, Press
Metal. But the bet paid of. From $113
million in annual revenue back then, the
company now generates $2 billion, with a
net proit of $138 million last year. And the
market capitalization tops $4.7 billion. hat
track record puts it on the Fab 50 list for
the irst time. “China is the best thing that
ever happened to Press Metal,” says Koon.
“China transformed us.”
Koon, 58, may be the face of Press
Metal, as well as the chief executive, but the
company has always been a family afair.
In 1986 he was fresh out of college with a
degree in electrical engineering from the
University of Oklahoma and was returning
home to Malaysia during a recession. Unable
to ind a job, he started Press Metal with his
six brothers (he’s the youngest of seven). He
knew hardly anything about aluminum, but
he had worked at his family’s small hardware
business, which traded aluminum bars. “We
thought that since we’re trading these bars,
why not make them?” he says. he brothers
pooled $50,000 and began an aluminum-ex-
truding company in a rickety rented factory,
equipped with secondhand machines.
Today, Koon, who has been at the helm
since the beginning, runs the business with
four brothers (the other two have died). He
calls the shots, but big decisions always go
to the board. “Our families are quite united;
every person plays their [part],” he says. “I
get a lot of support from all of them.” To-
gether the Koons own 60% of Press Metal,
with Koon being the largest shareholder,
with a 40% stake, giving him an estimated
net worth of nearly $2 billion. One brother,
Koon Poh Ming, the executive vice chair-
man, holds a 9% stake, worth around
40 | FORBES ASIA SEPTEMBER 2018
$425 million; the other brothers hold out to Australia, for example, is a lot easier.
smaller stakes. “We started from ground Customers are happy to get products from
zero without much expertise, but we are China, but from an international company.”
able to learn quickly,” says the CEO. What’s more, the Chinese market taught
Seven years ater it started, Press Metal Koon a lot about how to build a company
moved into its own factory in the West quickly and about the aluminum business
Malaysia city of Kapar. hen in 1999 it listed as he traveled to almost every province in
on the main board of the Malaysian Stock China. “he ‘China speed’ is very exciting,”
Exchange. “hat gave us good access to the he says. “If we didn’t choose to go to China,
market and publicity to grow further,” says we would have grown as a company but
Koon. “We attracted more support from certainly not at this pace. It’s about the pace.
inancial institutions—banks are more likely If you are slow, the market does not wait for
to support you if you’re a public company.” you. he market wants you to be there when
hat same year the company began export- they need you.”
ing to Europe, Australia and New Zealand, Until this point Press
becoming the irst Malaysian company to Metal was largely in the
sell aluminum products outside the country. aluminum extrusion busi-
And it opened a subsidiary in the U.K. and ness—making aluminum
became a major supplier there. products for diferent uses
Six years later Koon landed in the rural from aluminum alloy. But in
outskirts of Foshan. he area lacked any 2009 it set up Malaysia’s irst
proper infrastructure so “the big question aluminum smelting plant,
[people] ask is, ‘Why did you choose a place producing billets and ingots
like this?’ ” he laughs, recalling the plant’s in the coastal town of Mukah
opening ceremony. “hey say you are mad in Sarawak. he rationale?
to come to a place like this.” But nearby “he business of extrusion
Guangzhou was the hometown of Koon’s has low barriers to entry,
parents, which made it an easy choice when and there are many players,”
looking for a cheap location. he brothers says Koon. “But upstream
also speak Cantonese, the local language. requires a lot of capital and
Now Press Metal had to switly get the players are consolidated.
operation up and running. It bought a local From a business perspective,
aluminum smelter and hundreds of acres that’s where you want to be.”
of industrial land to put up its irst factory he local government
overseas. “We needed to get it started to spurred the company’s
demonstrate to the banks and the govern- move when it was seeking
ment that our outit [was] successful,” recalls industrial companies to buy
Koon, meaning there was no room for trial electricity generated by the
and error. hat also meant spending a large Bakun Dam—the largest in
chunk of his time in China. “Part and parcel Southeast Asia—ater plans
of doing business is you have to put in your to send the electricity to peninsular Malay-
efort,” he says. “If you put your money sia through undersea cables were cancelled
there, you better put yourself there.” because of the high cost and the uncertain
China changed Press Metal in many feasibility. “Sarawak itself does not need all
ways. It adopted Chinese technology for its this energy,” says Koon. “So the government
smelters, allowing it to lower its production decided to make it into a manufacturing
costs and give it an upper hand against hub. hat’s how we became a bigger outit.”
Western rivals. And its unusual status as an Press Metal got lucky again in 2012,
international outit in China made it more when a rival, mining giant Rio Tinto,
attractive to customers. “Many Chinese scrapped plans to build an aluminum JOSHUA PAUL GILBERT FOR FORBES
companies try to export, but there’s a lan- smelter in Samalaju that would have also
guage barrier,” says Koon. “We are Western- gotten its electricity from the Bakun Dam.
educated, so for us to bring the product Instead, Press Metal opened its second