Business Times: Wed, Aug 08
WITH City Developments Ltd's second-quarter results briefing just around the corner, one question on the minds of analysts and investors would be whether the group will make any pronouncements on succession planning.
After all, it was just two months ago that rival CapitaLand announced that its president and chief executive, Liew Mun Leong, would retire on June 28, 2013, when he turns 67. An external headhunter has been appointed to review internal and external candidates for a successor and one is likely to be named within three to six months. CapitaLand is part of the Temasek stable.
CDL is part of the Singapore Hong Leong Group, set up by the late Kwek Hong Png, father of Kwek Leng Beng. The son is now executive chairman of the Singapore Hong Leong Group and its listed property arm, CDL. Mr Kwek is 71, and could well continue to helm the group for several more years.
However, it would be good if CDL discloses the designated successor to Mr Kwek, as investors would prefer to have greater certainty about the group's future leadership.
It would be a fair guess that Mr Kwek's successor would be a family member. There's no dearth of experienced candidates within the group from Mr Kwek's fellow second-generation family members - including his brother Leng Joo, 58, who is CDL managing director; cousin Leng Peck, 55, who also sits on the CDL board.
There are also promising candidates among third-generation Kweks, including Sherman Kwek, son of the executive chairman and who oversees CDL's China business; and Mr Kwek Leng Joo's elder son, Eik Sheng, who heads CDL's corporate development department. A year ago, at the group's Q2 2011 results briefing, Mr Kwek Leng Beng said: "I am not averse personally to getting an outsider to come and run the company . . . if my relatives or my son cannot perform."
At the same time, he made this clear: "I love working. I would like to work as long as possible; if not, I can become an adviser because of my years of experience - if my mind is sound."
While shareholders will be heartened by Mr Kwek's passion and dedication, perhaps this year he will report some progress on just whom he is grooming to eventually take over the reins at CDL. The property doyen has much wisdom to impart to his successor, having led the group through various market ups and downs - such as the 1996 anti-speculation measures, followed by the Asian Financial Crisis, which led to seven years of famine in the Singapore private residential property market, and more recently the global financial crisis and Lehman's collapse in 2008, which created another property downturn. While that was shortlived, with a strong recovery that began in 2009, Mr Kwek has had to steer the group through various rounds of cooling measures.
Mr Kwek's track record shows far more hits than misses. He's one of the highest-paid CEOs among Singapore property developers but he is also one of the hardest-working head honchos around. An astute industry player, he not only has more than four decades of real estate experience, but is an old hand in the hotels and finance businesses (he helms Hong Leong Finance), not forgetting his experience in trading and manufacturing.
At CDL, he has always strived to safeguard shareholders' interest even if this has meant having to resist pressure from analysts to say, go on an "asset-light" strategy and constantly recycle capital in financial engineering feats to shore up the bottom line.
Mr Kwek took about a decade to embark on developing the group's historic site at Tomlinson/Tang-lin/Cuscaden roads - partly because of interruption from the Asian crisis property downturn but also because he appreciates the rarity of such a prime freehold site and knows how difficult it would be to find a replacement site once it's developed.
One of his biggest strengths is that he has treated shareholders' money like his own - with great care. The Kwek family's privately held Hong Leong Group owns about half of CDL and with Mr Kwek at the helm, management's interests are closely aligned with shareholders'.
Mr Kwek has also proven his critics wrong most of the time on a host of matters, including the timing of land purchases.
Of course, there have been a few setbacks - such as a delay in completing the South Beach project opposite Raffles Hotel due to escalation in construction costs in 2008, the global financial crisis and issues with earlier partners - Istithmar and Elad Group - which have since exited the project. When the site was awarded in 2007, CDL had indicated that the project would be ready this year.
Hopefully, with a new partner in place - Malaysia's IOI group - the project will have a smooth completion by the September 2016 deadline stipulated by the authorities.
CDL has also been a late bloomer in China - missing out on much of the property development boom in the world's fastest-growing economy that other Singapore groups including CapitaLand and Keppel Land have enjoyed. The group finally boarded the China bandwagon in August 2010, setting up CDL China, which owns a 36-storey office building, Tianjin City Tower, and has acquired three development sites - two in Chongqing and one in Suzhou.
Still, on the whole, Mr Kwek has achieved far more successes than he has faced setbacks.
On paper, it looks like he will be a tough act to follow. Even as we toast his achievements and wish him a long and healthy life, perhaps it is time the market is told if the search for a successor has begun. Or better still, exactly what the succession plan is.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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