Hock Seng Lee: SWOT analysis
Hock Seng Lee Berhad is an integrated marine engineering, civil engineering and building construction firm. The reputation of the company is a significant strength. HSL is one of the leading construction firms in Kuching, they have an excellent image in the construction industry in Sarawak. One of the examples is the Kuching’s Centralized Wastewater, which was carried out by HSL Berhad. It is a huge project tendered by the Sarawak government. This demonstrates the level of trust and confidence the government in the ability of HSL Berhad to handle large scaled projects.
Starting as a dredging operating company, HSL has progressed over thirty years to become a leader in this engineering market field in Sarawak. The company has technical expertise, qualified staff, a comprehensive portfolio of marine equipment and necessary official registrations and licenses. This includes the licenses of PKK, JKR Class A and LLYOD’S Register Quality Assurance ISO9001 to enable the group in undertaking road projects of any size. Besides that, HSL has both state (UPK) and national (PKK G7, CIDB) accreditation. These are essential to perform most of the projects in Sarawak.
HSL’s move into building construction in the 1980s. It represents the completion of the Company’s evolution into a fully integrated construction company. HSL has launched several successful residential and commercial projects as well as undertaken construction contracts for residential quarters and school throughout Sarawak. The company’s products have earned a reputation of being innovative in design and value for every ringgit spent. The Group’s move into property development has enlarged HSL’s operations and earnings base in the year 2000. HSL’s strong financial foundations offer flexible payment terms to clients and enable negotiation in contracts on cash-kind combination terms.
Another underlying strength in this business is the workforce of HSL Berhad.
Employees are highly skilled with qualifications. Everyone is participating in intensive programs provided throughout the company. It motivates employees and improves their performance.
The weakness of HSL Berhad is its inability to handle on smaller scale projects in the Sarawak market. The company’s expertise, skills, and standards of quality do not match the lower requirements and lower prices expected by some of the tenders. Besides, HSL Berhad focus of attention is still in the region of Sarawak. Therefore, the company has to enlarge their scope of business to nationwide for further development. HSL has many competitors, for example Cahya Mata Sarawak Berhad, Sunway Holdings Berhad, Ken Holdings and many more. Changing skills requirements and ageing workforce accentuates the skills gap. Training of new workforce becomes a challenge as well as a weakness of sorts for HSL.
The Malaysian economy is predicted to expand around 4-5 percent in 2012. The construction sector is one of the key drivers. The Malaysia government highlights the country’s strong economic fundamentals, macroeconomic policies and launched the Economic Transformation Program (ETP) as the domestic sources of growth during the coming years. HSL anticipates in the ongoing opportunities from these programs.
HSL is Sarawak’s market leader in land reclamation. The group has rapidly establishing itself as a key national player in the construction industry. The company major project for the coming years will be the migration of their information and technology systems. For instances, the operating systems, software, web applications and existing file server to new higher performance and higher capacity servers.
There are a lot of things to be done in Sarawak to ensure all levels of society enjoy the nation’s industrialization process. In keeping with the
fast pace of urbanization, HSL’s prospective projects are further in centralized sewerage works, flood mitigation works, affordable housing and educational institutions and projects for the main cities and rural communities. HSL are eyeing building construction projects such as an educational institution in the future. The company is capable and mastering of the tunnel boring technology allowed HSL to propose for the involvement in the next packages of centralized sewerage project and flood mitigation in towns of Sarawak.
The Tenth Malaysia Plan (2011-2015) and the National Mission (2006-2015) overview seek to achieve balanced development within the nation. The Economic Transform Program (ETP) is adding urgency to provide basic infrastructure to Sarawak’s rural communities in greater connectivity across the state. Therefore, HSL will align itself with abounding public policy and pursue infrastructure contracts such as water treatment and supply in the rural areas in Sarawak.
Sarawak and the Malaysian federal government have been making commitments to upgrade and extend the road networks. In the Malaysian’s Vision 2020 and the Ninth Malaysia Plan, the government is offering an infrastructure budget of RM15B for Sarawak. Thus, all these opportunities will lead HSL to grow into larger and stable corporate.
Changes in the environmental values may also affect the company performance and strategy negatively. Euro zone crisis had weakened the global economy. The impact had posed a greater threat to developing economies country such as Malaysia. The construction industries are in the doldrums and its contribution to the GDP figures would decline.
Quick changes in the price of raw materials such as steels and cements can greatly impact the profitability of a given project to the company. HSL Berhad needs to purchase huge amounts of raw material for its projects. Recently due to the international tensions, the prices of raw materials have
increased sharply. Another similar economic threat is the sudden fluctuation in the currency exchange rate that Malaysian Ringgit is accustomed to. When raw materials are purchased abroad, this can have a negative influence on the bottom line of HSL Berhad. The increase in electricity tariffs is also another issue in the rising expenditures of the company.
Hock Seng Lee Berhad, 2011. Hock Seng Lee Berhad [Online] Available at : http://www.hsl.com.my/ [Accessed 24 October 2012]. EMIS, 2010. Hock Seng Lee Berhad [Online] Available at : http://www.securities.com/Public/company-profile/MY/Hock_Seng_Lee_Berhad_en_1661484.html [Accessed 11 October 2012]. Tran, M., 2012. Eurozone debt crisis poses serious threat to emerging markets, theguardian, [online]. Available at: http://www.guardian.co.uk/global-development/2012/jun/19/eurozone-debt-crisis-emerging-markets [Accessed 22 October 2012]
Hock Seng Lee, 2011. Annual report 2011. [Online]
Available at: www.hsl.com.my/PDF/HSL%20AR%202011.pdf
[Accessed 19 October 2012]
Ghazali, G. 2011. Opportunities and threats in construction, Borneo Post Online [Online]. Available at: http://www.theborneopost.com/2011/12/07/opportunities-and-threats-in-construction-sector/ [Accessed 26 October 2012]