Hextar evolving into a mini conglomerate

WHEN Datuk Eddie Ong Choo Meng began his acquisition spree of public-listed companies a few years ago, he took the market by surprise and drew a fair bit of scepticism.

After all, the 46-year-old was not a big name in the corporate world yet.

Why would someone begin buying up companies in a variety of industries, what was his end game and where did the money come from?

Fast forward to today, and a clearer picture of his game plan is emerging.

Ong’s plan, as he shares, is to build a mini conglomerate; and that’s what he’s been busy with since emerging on the local corporate scene.

He’s also taking a long-term view – a 10-year view in fact. The goal is for the total market capitalisation of the listed companies in his stable to hit a value of RM30bil in that time, from the current RM8bil.

Here are some eye-popping statistics of what Ong’s Hextar group now has – 41 factories spanning a presence in 45 industries, spearheaded by different business unit heads.

There are other aspects to the group – a major financial technology play with a financial app called MoneyX; and more recently plans of his retail venture have emerged.

Hextar Retail Bhd, formerly known as Classic Scenic Bhd, now has over 10 outlets and 300 kiosks.

Meanwhile, Hextar Healthcare Bhd has a 20% stake in the mall at Empire City Damansara, possibly one of the largest retail malls in the country, and which will be renamed Hextar World at Empire City, cementing the Hextar brand in a bigger way.

Across all the companies in Ong’s stable, there are now more than 3,000 people employed.

While speaking exclusively to StarBizWeek from his office in Bangsar South, Ong says the last few years have been “quite remarkable” as Hextar began transforming from a single enterprise to a group of companies. “And from that group of companies, we are now transforming to become a mini conglomerate.

“The current market value of the eight public-listed companies we have controlling stakes is about RM8.3bil. We aspire to achieve a consolidated market capitalisation of RM30bil, and RM1.5bil in profit in the next 10 years,” Ong shares.

Can the Hextar group make this quantum leap?

Ong believes so.

“We are confident, as now, we have all 45 arrows firing,” Ong says, referring to the multiple industries in which Hextar has a presence.

“In a lot of the industries, we are the market leader and this gives us a big advantage going forward.

“We also have a clearer picture today on what each of our listed companies wants to do.”

Towards this end, he does not discount more acquisitions, but they are likely to be private entities that bring synergies to the listed companies in the group.

For 2024, the target is to acquire five companies.

He recalls when Hextar forayed into the corporate world seven years ago, its vision was to own controlling stakes in eight listed companies in 10 years.

“But we managed to speed this up, partly due to luck, timing, and the acquisition of some good businesses.

“To date, we have acquired close to 40 companies, private plus the listed ones. And considering some of these involved a group of companies, there are about 100 companies within the stable now,” he adds.

Ong’s beginnings

Fresh-faced and preferring to opt for T-shirt and sneakers, Ong can be mistaken for someone younger than 46.

But when he begins talking, you know he is a man in a hurry, with an ambitious streak that one would have found in the younger tycoons of the past, who were set on building up their large groups. Think Berjaya and YTL.

Ong makes an interesting point: Since the good old days when such entrepreneurs were successful in creating groups that defied the odds and grew into giants of the industry today, hardly any new names have emerged in corporate Malaysia with ambitions and plans to become another conglomerate.

Hailing from Klang, Ong has dabbled in business from the young age of 20, having set up an interior design company and later acquiring a juice brand which supplied soya milk to vendors operating from vans.

In 2006, The Star featured an interview with the then 28-year-old Ong, when he talked about his penchant for managing businesses, and his entry into his father’s company, then known as Hextar Chemicals Sdn Bhd.

He began as an administrator and had to fend off concerns that as the scion of the owner, he would be given a free hand to run the show.

Instead, he worked his way up, increasing the group’s productivity and introducing new technologies into the business.

Fast forward to today and Ong’s listed flagship is Hextar Global Bhd, which is one of the largest pesticide producers and manufacturers of other agrochemical products.

Hextar Global was created in 2017 following the reverse takeover of rival Halex Holdings Bhd, a deal engineered by Ong.

“Backed by strong cash flows, Hextar Global was akin to the golden goose, which paid out good dividends.

“This gave us a good foundation to acquire several specialty chemical companies, which saw profits of Hextar Global ballooning to RM67mil in 2023.

“Meanwhile, revenue has grown 10 times to RM669mil since our takeover,” says Ong.

A year later, in July 2018, Ong bought into a loss-making ACE Market-listed company known as SCH Group Bhd and renamed it Hextar Industries Bhd.

An engineering solutions company (catering to a wide range of industries including oil and gas, food and beverage, as well as aerospace) which was controlled by the family’s holding company, Hextar Holdings Sdn Bhd, was injected into Hextar Industries.

The company turned profitable in the financial year 2021, and got transferred to the Main Market of Bursa Malaysia last week.

But Ong really shot into the limelight when he emerged in Hextar Healthcare Bhd – formerly Rubberex Corp (M) Bhd – in late February 2020 just before the Covid-19 outbreak.

He made huge gains when the share price of the Perak-based glove maker rallied amid the glove mania on the stock exchange.

Subsequently, he went on to acquire major stakes in Hextar Technologies Solutions Bhd (formerly Complete Logistic Services Bhd), Hextar Capital Bhd (formerly Opcom Holdings Bhd), Hextar Retail Bhd (formerly Classic Scenic Bhd), KIP-real estate investment trust (REIT), Pekat Group Bhd and SWS Capital Bhd and Binasat Communications Bhd.

The stakes in Pekat and SWS have been divested as part of the group’s investment portfolio realignment.

To infuse a sense of connection, six companies have been rebranded with the Hextar identity. Ong says this will pave the way for new growth trajectories having built an ecosystem under the larger Hextar group.

“Essentially, there are now three segments. The first is our traditional business, which comprises chemicals, oil and gas and fertilisers.

“The second division will focus on fast-growing businesses such as 5G, solar, power, transmission and retail business.

“Meanwhile, the third division will pivot into areas of the future, involving technology, artificial intelligence (AI) and data management.”

Through Hextar Technologies, the group launched a personal financial advisory super-app called MoneyX last October. The app aims to simplify one’s finances using AI capabilities and machine learning, and it has seen 77,000 downloads to date.

Moving big into retail

While Hextar is a name known in the corporate circles now, Ong says there is a lack of awareness where the man on the street is concerned. Hence, the plan is to move into businesses that sell products or services directly to individuals.

“We have been mainly dealing with other businesses, and feel now the time is right to move bigger into the retail or business-to-consumer (B2C) segment.”

Ong says the retail journey began via KIP-REIT, which has eight community-centric malls. “The REIT is performing well, delivering unit holders yields of between 7% and 7.2% a year. With the opening of the Hextar World mall in the second quarter of 2025, we will have about nine retail malls under the group,” he says.

Hextar Healthcare bought the 20% equity interest in the mall for RM180mil cash in 2021. The mall is part of the RM5bil Empire City Damansara project undertaken by Mammoth Empire Holding Sdn Bhd back in 2011.

The project, which had faced several delays, also comprises hotels, offices and apartments.

Ong also has a small personal stake in the mall, which boasts a net lettable area of 1.75 million sq ft, including 8,572 car park bays in the vicinity.

In a Oct 4, 2021 filing with Bursa Malaysia, Hextar Healthcare stated that the Empire City Mall had been independently valued at RM1bil by property valuer Knight Frank and the acquisition would enable participation in a sizeable mixed property development project within a relatively short period. Explaining the rubber glovemaker’s diversification into property investment, Ong says it had drawn criticism as the investment was made during the pandemic.

“During the pandemic, a lot of companies rushed into rubber glove manufacturing, resulting in an increase in supply.

“However, Hextar Healthcare decided to conserve its cash. The company did not open any new production lines, nor did it dish out dividends.

“And this has been a blessing in disguise.”

With shopping and leisure activities gaining traction post pandemic, Ong is confident the mall will be a new destination for Kuala Lumpur, and will contribute a sustainable share of profits.

Touching on Hextar Retail, Ong says the company bought a 51% stake in a shoes and clothing company, Redina Malaysia Sdn Bhd, in December 2023, marking its diversification out of the wooden picture frame moulding business.

The company paid RM35.7mil cash for Redina, which is the brand licensee for Renoma, Jockey, Moto Guzzi, Alfa Romeo, Valentino Creations, Nautica, Crocodile, Arnold Palmer and Beverly Hills Polo Club.

“We are also eyeing more acquisitions in the food and beverage sector as we aim to create a Hextar brand that becomes a household name like Sunway and YTL,” he says.

However, he contends branding takes time and there is still some way to go.

Gearing up

A question that naturally pops up is can the group gear up further considering the spate of acquisitions.

Ong says the listed companies are on good financial footing, with five being in net cash positions. Meanwhile, Hextar Global and Hextar Industries have gearing levels. As for KIP-REIT, it has a fair bit of gearing but this is not unusual for a REIT, he adds.

“So there is an appetite for us to gear ahead, around these listed companies.”

On a personal level, he admits there is debt taken on but it is within control.

“This gearing is collateralised or pledged to the shares owned.

“But if looked at as a whole, the gearing is manageable as the consolidated market cap is about RM8bil.”

Furthermore, he points out that the ownership in those listed companies are clear, unlike many conglomerates which have cross-holdings.

“The shares are directly owned under my personal name, or our holding company, Hextar Holdings Sdn Bhd, Hextar Rubber Sdn Bhd and Hextar Tech Sdn Bhd.

“An exception is Binasat, which was bought via Hextar Capital. So we are transparent and the banks are comfortable.”

Having left the running of the listed companies to professional managers, Ong now sees himself more of a dealmaker rather than an entrepreneur.

Besides the controlling stakes in the eight listed companies, which gives him a worth of RM4.6bil, Ong has minority stakes in a number of other Bursa Malaysia companies.

These days he does a fair bit of travelling, sniffing out the next opportunity.

“Malaysia is in a good spot to benefit from the trade war between the United States and China, but not many are pouring back money into industries. We see good prospects for the local economy and that is why we are investing billions.

“However, it is tougher to find good companies as opposed to during the pandemic,” he says, wrapping up the hour-long interview.