Would you believe it if I told you that under Chern Yuan’s leadership, he scaled Yinson from 2011, where the share price was less than RM1 with a market cap of only RM67 million to today where Yinson is trading at over RM7 with a jaw-dropping market cap of RM6.5 billion?
In the first of six ‘Thought Inspire Series’ powered by Endeavor Malaysia and CGS-CIMB, CY Lim, the 37-year-old Group CEO of oil and gas services giant Yinson Holdings talks to financial journalist Khoo Hsu Chuang about the journey that propelled the family controlled logistics firm into the second-largest Floating Production Storage and Offloading - FPSO - company in the world.
Exemplified by the 100x increase in market value between 2010 and 2022 to its current RM6.5 billion, CY shares the management secrets, lessons and trials of building a truly global business from a purely domestic one in just 11 short years beginning when he took the reins when he was just 25 years old.
In your early years, you were able to have the courage to embrace changes by investing in them despite the inherent challenges. Tell us more about those early years and the difficulties you faced at the time.
“There's no easy journey in life; a lot of risks had to be taken as we scaled Yinson”, said CY. Throughout the journey, he realized that taking every mistake as a learning process is the most important aspect when scaling a company. “I appreciate the mistakes we made and we indeed continue to make mistakes today. But with every mistake made, I believe we get stronger as we learn from them”, said CY. In a span of 11 years, CY scaled Yinson from 2011, where the share price was less than RM1 with a market cap of only RM67 million to today where Yinson is trading at over RM7 with market cap of RM6.5 billion. As it is a very capital intensive business, CY emphasized the constant need to maintain shareholding as much as possible. “A lot of difficult processes get easier when you start engaging. As you identify your stakeholders, lenders, shareholders, clients and your vendors, you’re getting them to buy your vision and what you’re doing.” explained CY. Other than that, he also emphasized the need to always look out for what's happening in the world. With the oil and gas industry hit by environmentalists and the need to address climate change, it is important for an entrepreneur to be extra vigilant in handling their business in this field.
Asian culture is often known as being adverse to changes. Living in an Asian household, how did you manage to convince your family to pursue your current field of business?
In contrast to common Asian culture, CY has been lucky enough to have a father who has always been supportive towards his children in pursuing fields they wanted to. Hence, it was not really a war he had to fight in his experience. “My father loves growth. If he thinks that this business is something that can grow and his children are growing it, then he’s more than happy to support and back the growth. Over the years, he’s been very supportive with advice as well as capital.” To him, the toughest part in his early entrepreneurial story would be to convince external capital and strategic partners into the business.
As one of the largest independent global FPSO operators, what do you think you did right and different from the rest?
Accuracy in delivery
Under CY’s leadership, Yinson transformed as the 6th largest independent global FPSO operator. While running their show, many peer companies of Yinson have fallen out from the competition throughout the 12 years. One of the things that CY believes that keeps them going strong is their capability to deliver in a timely manner and keep the cost according to the set budget. “We've done about seven FPSOS and they were all run according to the budget and delivered on time. My people have done a very good job in running the projects and I think that builds a lot of trust in our clients,” CY proudly said. This is because Yinson's clients have stayed loyal ever since their first project with them and that clearly shows that Yinson is doing it right.
Other than above, CY also believes that their team chemistry is one of the forefront pillars that contributes to Yinson’s success. “In the past when we were building the business, we did hire a lot of top talent in the industry. However, things didn't go as well as we hoped. As we grew wiser, we realized that sometimes running a company is like running a football team. You need chemistry- finding the right people with the right chemistry. Twenty star players are nothing when they have no chemistry.” CY explained. As a company, Yinson tries to train their employees themselves to ensure that they grow with their set of core values and work culture.
As an entrepreneur, CY’s clients are national oil companies who are known to be notoriously sticky in their quality assessment. With that said, he believes their robust internal policies are one of the top aspects their clients bought into. When an entrepreneur deals with big clients, it’s key for them to have robust policies internally, which includes health policies, safety policies and more. This is because he believes that having good robust policies helps to create a good impression and helps build the bridge of trust that’s needed in a client or an investor.
When dealing with private equity and VCs, how would you advise companies to manage their growth and achieve quality of earnings as well as to manage the expectations of investors at the same time?
The power of patience
Despite being an impatient person himself, CY stresses on the importance of patience in dealing with private equity and VCs. “Our contract is not negotiated over three months or four months. More often than not, they are negotiated over a year or two. That's the kind of length that we take to negotiate a contract and it's because we want to secure the future of the company”, he said. Fast results are exciting but are often not sustainable for the business. It is a safer approach of growth for a company to take their time in building their empire. “A lot of the achievements we have that you see today are the results of efforts made two, three years ago”, he added.
Engagement is key
Dedicating over a decade of his life for Yinson, CY firmly believes that engagement is the key in managing their stakeholders well. CY shared the team thrives on feedback so much that they always made sure to arrange meetings before the investors and bankers could call for one. A certain level of transparency in their constant communication with their important stakeholders helps them build a strong trust dynamic between them. “Whenever there’s a problem, we make sure to explain the situation and engage with them. Even when there are no problems, we try to help them understand where the trajectory of the company will be”, he further added. For example, they understood that green solutions are often not going to be profitable from day one. With that in mind, CY engaged with their stakeholders to help them truly understand and buy into their vision and mission, as a green oil and gas company. This is because he believes that investors and banks are not there to only hear the good stories. They are there to also see where the pitfalls and potential pitfalls are.
“A good level of transparent communication serves as a reminder to our shareholders and bankers about what we do, why we do it and why it is hard to sign a contract that protects ourselves and the future of our company. It makes our stakeholders appreciate the negotiations that we have to go through”, he explained.
The oil and gas field is currently under a lot of pressure from environmentalists and activists. For entrepreneurs who are venturing out into this business, how would you advise them to strategize in transitioning from the fossil fuel era to the new era?
Staggered approach for social stability
As a strong advocate and supporter of green initiatives and sustainability transformation processes, he acknowledged the urgency of addressing climate change through various initiatives. Adjacently, Yinson recently diversified into renewables and green technologies with global footprints in SouthEast Asia, Europe, and West Africa. However, he emphasized the need to take a staggered approach in addressing climate change. “Climate change requires a staggered approach. When we transition to a greener future, we also need to make sure no one is left behind. The inconvenient and unspoken truth with the green future is the fact that if you're not financially liquid you're going to be left behind because you can't afford the fancy new stuff such as electric cars and solar panels.” said CY. As a huge company in the field, CY feels the responsibility to ensure that the transition is accommodating to the lower social classes as well. Yinson has been helping many countries such as Ghana and India, where they help produce power at the lowest possible price in order to provide the people mobility at the lowest possible price.
You mentioned that many mistakes were made and many setbacks have happened in your entrepreneurial journey. Can you share the lessons and entrepreneurial principles that you’ve learnt from?
Finding the right local partner
“Most people jump into partnerships without knowing the partner well. In building a partnership, you need to truly understand the candidate partner as well as the local market before starting an office there. There’s a lot of background work that has to be done before you go into a country”, CY advised. CY admits that luck plays an important role in finding the right local partner. In his case, he was very lucky to meet the right partners in the last 12 years of growing Yinson. He understands that some people spend a lifetime and not meet a single right partner. However, he also emphasizes the need to not make decisions on impulse or current events. For Yinson, the team spent time studying the local partners for at least one of two years before they formed a partnership. Studying the local partners involves looking at their reputation as a company, their company’s balance sheet, whether they understand what they’re doing as well as whether they respect the contract.
Localizing the team
“Most people simply send the top team in their headquarters to a country where they're growing and I think that's the biggest mistake. You need to have someone to run around that can actually know who are the right partners to have and how we should execute our job according to the country’s culture and norms”, he further advised. Not only that, Yinson also ensures the foreign offices take part in the main group activities to help them stay updated with Yinson’s future plans. CY noted that it's indeed easier said than done but all it takes is a lot of effort and a good communication team.
To know your strengths
“I think as an entrepreneur, you always have to know what you bring on the table and to look for quality earnings instead of one-off earnings', CY mentioned. CY believes that what they bring to the table is their engineering capabilities. Due to their ability to deliver FPSOS at probably the lowest prices and winning bids around, they bring down the cost and are able to have clients choosing them to execute projects on a returning basis. On quality earnings, as someone that holds the key role in Yinson’s short to long-term business strategies, he acknowledged that they are very hard to come by. However, with good work ethics and strategies, he assured that it is possible to gain them. “The toughest thing to do is when you have to inform your shareholders that you are not going to win the project because the terms are not in our favor', CY shared. “However, it is important for you to secure the future of the company by winning a profitable contract rather than just simply winning a contract. When you look for the long term in any business, you need to sign a profitable contract and one that brings you quality earnings,” he further explained.
As a company that deals with national resources, how do you deal with political conflicts? How do you attract the right people as well as retain them and keep fighting the good fight?
Running a company that has foreign offices in several countries, CY tries to not get Yinson too involved in political affairs. “We just need to make sure that we believe in the future of our foreign partners. When we sign a contract of 20 years with a company, we need to believe that 20 years from now they will still be around. We also try to bind their vision that they are growing and that they will be able to pay their FPSOS by ensuring that they have enough resources in the company”, he explained.
Striking a balance between profitability and impact
As Yinson comes to a country and ensures that their foreign office is localized, they try to give back to the communities by educating the locals on what they do. They make sure that they are hiring with one of the higher pay rates than others in these countries. This helps them to build a good story to tell as Yinson expands bigger to another country. “Every country that we go to appreciates our investments and is able to know and see that we are not entering the country just to win a project and take away their resources. It has always been about striking a balance between profitability and impact”, explained CY. This method has helped Yinson a lot in building that chemistry not only within the local team, but also between the global team.
To have a thorough planning
“I think the good part of our business is that it's an order book business which means we can have a backlog of all this. This means we can have clauses that disallow our clients from terminating at will and that they would have to pay the termination fees if they were to choose to do so.” CY pointed. Having the ability to plan with that order book is very important to him so he could plan the resources, how he’s going to reinvest into different technologies and how he’s going to invest in energy transition. This allows Yinson to not resort to laying off their employees in order to cut budget as they’re capable of playing and holding the stakeholders accountable to also play according to the rules.
If you're trying to manufacture the model entrepreneur, what would be the top ingredients a person has to have to be a successful entrepreneur?
Acts of resiliency
To CY, it is hard to pick out certain traits as top ingredients for a person to be a successful entrepreneur. According to him, it all includes having the willingness to put in the hours and the effort, having the willingness to take the right risk and not simply risking other peoples’ money. Overall, it is to have the acts of resiliency to push through as an entrepreneur in this tough field. “There were times in the early days where we wanted a project without having the capital in the first place. We never knew whether we could find the capital needed but we prioritized winning the project anyway. Only after winning the project, we talked to banks and sold our assets, which later eventually we were able to fund them”, CY said as he opened up about one of his riskiest ventures. “These are the things you do when you are much smaller. When you see an opportunity, you need to pounce on it. I think that’s what we should do to break down the barriers that we think cannot be achieved”, CY advised. Other than that, he believes it is important for entrepreneurs to have this trait as they are leaders. CY emphasized the importance for an entrepreneur to set the right energy with the right mindset for the whole team to function as best as they can, breaking down barriers that they think cannot be achieved.
Keep your stakeholders happy
Being a seasoned player himself, CY firmly believes that for any business to succeed sustainably, an entrepreneur should always keep their stakeholders happy. When you make sure your clients and vendors are happy by showing your values in what you're doing, you help both sides benefit from the relationship. “It's only when they feel that their lives are impacted and that there's a lot of value in the product that you give them, that the business will be successful”, he further added.
For the next 10 to 30 years, where is Yinson going to be and how do you get that continued burst of growth?
As someone that oversees the overall performance of Yinson together with the Group Executive Chairman and Senior Management team, CY feels the responsibility to provide his employees the platform, resources and capital in growing the business towards the company’s vision. Being the humble person that he’s known for, he emphasizes that the company is currently driven much more by their people than himself. A recent achievement marks CY making headlines as the first in Malaysia to issue the entire RM1 billion sustainability-linked sukuk wakalah programme, achieving sustainability performance targets by 2025. “We want to look at ourselves as an energy infrastructure player that's not only providing FPSOS, but also power at the lowest possible cost that creates mobility solutions for the men on the street”, explained CY. “For the next 10 to 30 years, I hope that we continue to impact the lives of our clients and impact the communities that we work in. It may seem a little soft when you want to affect the communities and make a difference but that makes it much more meaningful and profound”, CY said as he wrapped up the session.
The content of this article is summarised from our ‘Thought Inspire Series’, a series of six exclusive physical interviews with world-class & established company owners highlighting their entrepreneurship journey organised in collaboration with CGS-CIMB. The series is aimed to inspire, entertain and motivate all aspiring and existing entrepreneurs in the Malaysian entrepreneurial ecosystem. Hosted by a financial journalist, Khoo Hsu Chuang, our first event featured Lim Chern Yuan (Group CEO of Yinson). Follow us on our social media pages to get the latest news on upcoming events and key learnings.