finally some movement after breaking thru the 23cts barrier yesterday, which took quite a while.

WEE Hur Holdings&rsquo roots may lie in the construction industry, but the mainboard-listed company has quickly made a name for itself in other sectors, from property development and student housing to fund management. 

 

This diversification has proven successful, with income growing steadily year on year. 

 

In its latest financial year ended December 2023, revenue was up 4.1 per cent year on year to S$224.8 million. Net profit grew 45.1 per cent year on year to S$98.6 million. 

 

Compared with the pre-pandemic 2019 financial year, revenue rose 17.2 per cent from S$191.8 million and net profit nearly trebled from S$34.6 million. 

 

In 2022, Wee Hur Holdings also sold a 49.9 per cent stake in its Australian-focused purpose-built student accommodation (PBSA) fund for A$567.9 million (S$573.6 million). The buyer, Reco Weather, was a Singapore-based investment holding company linked to state investment firm GIC. 

 

Goh Wee Ping, chief executive officer of Wee Hur Capital, the group&rsquo s fund management arm, said that sealing that deal was his biggest milestone yet. &ldquo It was the (feat) that crystallised my achievement in the family business,&rdquo he told The Business Times. 

 

Goh, who is also chief investment officer at Wee Hur Holdings, is one of the second-generation leaders running the company. It was founded as a construction company in 1980 by his father &ndash executive chairman and managing director Goh Yeow Lian &ndash together with three brothers and two brothers-in-law. 

 

Since then, Wee Hur Holdings has evolved significantly from its construction roots. 

 

The two segments that now hold the most value for the group are probably its PBSA and workers&rsquo dormitory businesses, said Goh Wee Ping. 

 

In FY2023, the PBSA segment accounted for S$124.3 million of the group&rsquo s profit before tax, while S$73.7 million came from the workers&rsquo dormitory segment. The group&rsquo s property development segment in Singapore raked in significantly less at S$13 million, while its building construction segment made a loss of S$21.1 million.

 

Goh highlighted that there is also great growth potential in the group&rsquo s fund management and investment businesses. 

 

Wee Hur still holds a 50.1 per cent stake in the PBSA fund, which was first established in December 2016. The aim then was to develop a portfolio of up to 5,000 beds in Australia&rsquo s major cities. The portfolio now consists of over 5,600 beds across seven student housing properties in Sydney, Melbourne, Brisbane, Adelaide and Canberra. 

 

At the same time, Wee Hur has invested in around 10 venture capital funds and made direct investments into 14 startups across the globe. This includes startups such as Zookal, which operates in the education technology space Queensland-based Jet Zero Australia, which focuses on sustainable aviation and local smart-sensor-systems startup WaveScan.

 

Unlike starting an entirely new operating business &ndash which requires considerable time and work in developing an effective business strategy &ndash Goh noted that investing is more passive, leaving the execution to others. 

 

&ldquo If it grows into something quite substantial, we may then (consider) a merger or acquisition, and it becomes another operating business,&rdquo he explained. &ldquo If not, it stays as it is, as just another investment we put money into then exit after a few years.&rdquo  

 

Branching out

The group&rsquo s diversification is also helpful given that it has not been the easiest of times for construction companies or property developers, said Goh. 

 

For one, he pointed out that construction costs remain high post-pandemic, eating into profit margins. 

 

Sentiment in Singapore&rsquo s residential market continues to be weak amid the current high-rate environment, he added. In 2023, for instance, new private home sales fell to their lowest level in 15 years with just 6,452 units sold. This trend seems to have dragged on in 2024, with monthly sales in February dropping to 149 units &ndash 47 per cent lower than the 281 units moved in January, and about a third of the 433 units sold in February 2023. 

 

&ldquo This is really not the time to be aggressive (as a property developer),&rdquo said Goh. &ldquo Once you commit to a development, and if you get caught in the wrong part of the market cycle, it can be very painful.&rdquo  

 

While the PBSA and workers&rsquo dormitory segments remain &ldquo good businesses&rdquo , Goh highlighted that opportunities are not always available. &ldquo A lot of institutional (investors) that I speak to all have approval to invest in Australia and student accommodation, but no one can find the opportunity to do so.&rdquo  

 

Goh also sees the group&rsquo s diversification into fund management as a natural progression for the company as it climbs the value chain. 

 

Although branching out can be challenging, Goh believes that this entrepreneurial spirit &ndash of looking beyond their niche, and leading with curiosity and an open mind &ndash is key to propelling and sustaining Wee Hur&rsquo s growth. 

 

For instance, said Goh, had Wee Hur not expanded into property development in 2009 and the workers&rsquo dormitory business in 2013, it would be in a very different position today. The pandemic was the nail in the coffin for many in the construction industry, and the group could well have been among the casualties.  

 

&ldquo In the next 20 years, I think we will encounter another shift in&hellip how we grow the platform,&rdquo said Goh. &ldquo It is about balancing between the operating business and a bunch of other investments. I think that&rsquo s the direction (we&rsquo re heading towards). I don&rsquo t think we will forever be so concentrated in real estate.&rdquo  

 

He added: &ldquo We will make use of what we learned so it hopefully doesn&rsquo t take another 15 years to double or triple where we are.&rdquo

A married deal on Dec 5 saw Wee Hur Holdings : E3B 0% executive chairman and managing director Goh Yeow Lian acquire one million shares at 20 cents per share, increasing his total interest from 44.41 per cent to 44.52 per cent.

 

Executive director and deputy managing director Goh Yew Tee also acquired one million shares at 20 cents per share, while executive director Goh Yeo Hwa acquired 2,783,800 shares at 20 cents per share.

WEE Hur Holdings : E3B +3.65%&rsquo recent sale of a chunk of its Australian purpose-built student accommodation (PBSA) portfolio could be described as something of a coup for the construction and real estate group.

 

The mainboard-listed company had announced in a bourse filing last month that it will be selling a 9.9 per cent stake in Wee Hur PBSA Master Trust (WHPMT) for A$112.7 million ($113.3 million).

 

Other shareholders of WHPMT holding a 40 per cent stake will also divest all of their interest in the property trust.

 

The deal values the fund&rsquo s properties at A$1.14 billion, with an equity value of A$551.1 million. The latter is 1.4 times&rsquo its current value on the property developer and builder&rsquo s books.

 

The buyer, Reco Weather, is a Singapore-based investment holding company linked to state investment firm GIC.

 

Goh Wee Ping, chief executive officer of Wee Hur Capital, said Wee Hur had begun looking at various exit strategies a year and a half ago.

 

The trust was set up in 2016 to develop a portfolio of up to 5,000 beds in major cities in Australia. As manager of the trust, Wee Hur was required to prepare an exit strategy for unitholders of the trust before June 30.

 

&ldquo But by the time we got our act together, Covid had already happened so it was not an easy time for us,&rdquo he said.

 

Many potential investors had already turned more cautious. Also, the trust had been priced on pre-pandemic rates. It was therefore more challenging to come to an agreement on pricing.

 

&ldquo We wanted our price, but potential investors and purchasers wanted some kind of rental guarantee,&rdquo said Goh.

 

Occupancies for Wee Hur&rsquo s 3 PBSAs in Australia were hovering at 30 per cent at the time, bringing in just enough to pay operating expenses

 

Given these difficulties, Wee Hur also wondered if it made sense to undertake a sale immediately instead of waiting for the market to recover.

 

&ldquo Throughout the whole negotiation and market process, we were always caught in a dilemma. Do we exit now? Or do we hold on until after (the pandemic) is done and try to sell again in 4 to 5 years?&rdquo Goh said.

 

&ldquo Ultimately, we chose to go through with the transaction now because it provides a lot of certainty for investors. That was the number one consideration behind this whole transaction.&rdquo

 

The scouting and negotiation exercise finally landed the company one potential buyer. But this deal later fell through as the potential investor was unable to meet the terms.

 

In the end, Goh was able to use his personal connections to find an investor and close a deal for partners in the trust.

 

Wee Hur kept a 50.1 per cent stake, after discussions with transaction advisers, market feedback and taking into account security requirements imposed by the banks financing the development of the assets.

 

Goh said the sale has cemented Wee Hur&rsquo s reputation among institutional investors, opening the door to future partnerships. In fact, the company is already in talks with a few of such investors, he added, though he did not disclose any names. 

 

&ldquo With this transaction, we have demonstrated that institutional investors are comfortable with us and see us as a responsible entity that can manage their money,&rdquo he said.

 

Branching out

 

Wee Hur started out in 1980 as a construction company. It later underwent a restructuring exercise and was listed on the Singapore Exchange in 2018.

 

With the war chest afforded by its initial public offering, the mainboard-listed company went on to branch out into property development in 2019 and the workers&rsquo dormitory business in 2013.

 

When a dip in the market threatened the business in 2014, the group looked overseas to diversify its revenue streams and identified a new growth avenue in the PBSA market in Australia. 

 

Goh Yeow Lian, Goh Wee Ping&rsquo s father and Wee Hur&rsquo s executive chairman and managing director, believes the group was able to survive the pandemic in large part due to these moves.

 

The group posted a net profit of S$662,000 for the full year ended December 2021, a 97 per cent fall from the previous year&rsquo s net profit of S$21.9 million. 

 

Wee Hur attributed the decline in profits to lower revenue contributions from most of its business segments and higher costs incurred by the construction business, among other things. These were offset by a fair value gain on its investment properties.

 

The group&rsquo s revenue rose to S$200.4 million, from S$189.9 million a year ago, while cost of sales went up 33 per cent to S$191.9 million year on year.

 

Waiting for a recovery

 

The road to recovery for the construction sector remains rocky, said Goh Yeow Lian. Industry players will likely spend the next 2 years working to complete projects delayed by the pandemic, he added.

 

Thereafter, the question is whether there will be enough new projects to support the industry: &ldquo Not only do we need a project, we need a good project to last through another few years.&rdquo

 

Wee Hur therefore intends to be more prudent in the near term: &ldquo Going forward, I think we&rsquo ll be more mindful about risk management. We may also trim or reduce our exposures to some businesses which are not really performing or making money,&rdquo said Goh.

 

The long-term vision for the company, however, will still be to seek out new avenues for diversification to ensure the group&rsquo s longevity.

 

&ldquo If you look at other countries, like Hong Kong and Thailand, how (the companies there) survive through the first to fourth generation is through diversification,&rdquo said Goh Wee Ping.

 

&ldquo That&rsquo s how you can weather the storm.&rdquo