Hiap Huat to boost lubricants’ contribution

PETALING JAYA: Hiap Huat Holdings Bhd is targeting its lubricant segment to contribute up to 30% of its revenue in 12 months, from 10% currently.
Managing director Chan Say Hwa (pix) said the lubricant segment is its third biggest revenue contributor after fuel oil (50%) and scheduled waste collection (20%). Examples of lubricant products are engine oil, mould release oil and grease for the manufacturing industry.
“At the moment, fuel oil is the major revenue contributor and, in fact, none of the other segments’ revenue can easily overtake it but due to the existing oil price situation, the chance for us to move (focus) to lubricants is higher,” he told SunBiz in an interview recently.
Chan said this is because falling commodity prices and cheaper raw materials have allowed end-products such as lubricants to fetch better selling prices. “It makes production cost go down, and the gross profit margin is better in lubricants.”
Chan said Hiap Huat has received enquiries for lubricant products in the last few months from potential buyers in Vietnam and Thailand. Besides Malaysia, the company’s lubricant products are also marketed in Korea.
“Currently our sales team is talking to several overseas parties. Exports (overseas sales) may fetch better margins compared with sales in the domestic market, which is experiencing weak ringgit and shaky economic grounds,” said Chan.
However, he said, fuel oil will still be the main contributor (remaining at about 50%) and lubricants would hopefully come in second, from third currently.
Hiap Huat’s lubricant products are manufactured at its plant at Pulau Indah.
“In terms of production, we don’t see a problem. We push more marketing, get more buyers and the plant is ready to produce anytime,” said Chan.
On exposure to the weakening ringgit, Chan said the ACE Market-listed group is not impacted at this moment. About 95% of its raw materials are sourced locally while production is also done here.
Hiap Huat is a licensed scheduled waste recycler, involved in collecting, recycling, re-refining and producing recycled products from waste oil, waste solvents and used drums and containers that it is licensed to collect, treat and process.
Chan said plans to venture into the overseas market are only confined to the lubricant segment, as it is not a good time to push other segments, such as fuel oil, abroad.
“The income from the scheduled waste, container and paint segment is only from the local market so the chances for us to go overseas mainly are from lubricants. The container and paint segments don’t look positive in this coming future so that’s why most of our efforts are centred on oil products like fuel oil, lubricants and scheduled waste,” he added.
Chan said although the recycling business has been tough in the past one or two years because of the presence of too many players in the market, it is still not a sunset business.
“Looking forward, the prospect of recycling is still there as the government is stringent on tightening the regulations so the demand for this service is increasing.
“It’s only about how are we going to improve our efficiency and operating costs to improve the numbers,” said Chan.