This article by Jennifer Tan appeared in SGX's kopi-C: the Company brew series, and is republished with permission.|
A familiar object in Teo Hark Piang’s childhood was a blue 60-centimetre tall, 30-centimetre-wide liquid petroleum gas cylinder. For all its ordinariness, the canister was a potent reminder of warm kitchens, home-cooked food and shared family meals. “As a kid, I remember the cylinder being taller and bigger than me initially, but over the years, I outgrew it in terms of height,” the Chief Executive Officer of SGX-listed fuel products supplier Union Gas Holdings Ltd recalled with a chuckle. “It was an essential part of our lives – we cooked with it, we ate with it. It has generated many wonderful memories for our family.” |
More than four decades ago, Teo’s father – Teo Kiang Ang – founded the family’s gas distribution business, selling and delivering bottled Caltex gas to households in Singapore.
In the late 1990s, when Caltex Gas exited the Singapore market after the onset of the Asian Financial Crisis, Teo’s father grabbed the opportunity to acquire the oil firm’s gas distribution business, as well as its bottling facility.
That watershed move in 2000 allowed the company to establish its “Union Energy” brand, turning it into the only local distributor to own one of Singapore’s four gas bottling plants.
As the scion of a gas entrepreneur, Teo’s relationship with the bright blue cylinder extended beyond the kitchen into his teenage years. He helped with customer deliveries after school, and over the years, honed skills of the trade, such as welding, pipe-laying and stove repair.
“The LPG cylinder has been my constant companion through childhood and my growing up years. I definitely have a strong attachment to it,” he grinned.
Today, Union Gas is an established provider of fuel products in Singapore, with track record of more than 40 years of operations. Its three key businesses comprise Retail Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG) and Diesel. The Group, which listed on SGX’s Catalist board in July 2017, has a current market capitalisation of nearly S$60 million.
Home-Grown Label
Under its “Union” brand, the Group supplies bottled LPG cylinders to more than 180,000 domestic households in Singapore, mostly in mature public housing or landed residential estates. Other sources of demand include dormitories as well as corporate and private events.
With over 200 vehicles, the Group operates one of the largest delivery fleets for supply of bottled LPG cylinders in the city-state. Its 50-strong call centre operates all year round to take orders, while its “Fuel My Life” application allows customers make purchases online through their mobile devices.
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Enlarging market share |
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“In recent years, there has been a gradual attrition of smaller players in the retail LPG segment, mainly due to increased operating costs, stricter regulations and higher customer expectations. “This trend presents us with opportunities to acquire or partner smaller dealers to enlarge our share of the residential market.” |
From its roots as a traditional LPG player, Union Gas has evolved to become a supplier of CNG and diesel. The Group sells and distributes both CNG and diesel at its 24-hour fuel station in Old Toh Tuck Road. It also supplies CNG to natural gas vehicles and industrial customers, as well as transports, distributes and bulk-sells diesel to commercial clients.
Over the years, Union Gas has gained significant goodwill and confidence from customers, earning a reputation for quality, reliability, consistency and safety. It works only with trusted suppliers to ensure the quality of its fuel products, and has implemented a quality assurance system that includes inspections as well as training for its drivers, during the product handling and transportation process.
In 2018, the Group enlarged its domestic distribution network by acquiring non-contractual domestic customers from Semgas Supply Pte Ltd, as well as other small LPG dealers.
Regional Ambitions
In 2018, Union Gas also expanded into the commercial and industrial segment with the acquisition of U-Gas Pte Ltd, which is primarily involved in the retail sale of LPG to hawker centres in Singapore. The Group is working to broaden its distribution network to supply the cooking gas to eating houses, coffee shops and/or commercial central kitchens.
“Given the typical Singaporean’s penchant for eating out, hawker food centres and coffee shops are very much woven into the fabric of our society,” he added.
“This push into hawker centres is expected to pave the way for our entry into other commercial segments, including coffee shops, and will reap benefits for years to come,” he added.
The strategy is starting to pay off – Union Gas chalked up revenues of S$6.4 million from the commercial sales of retail LPG for the six months ended 30 June 2019, surpassing the S$5.6 million registered for the whole of 2018.
At its Initial Public Offering, Union Gas disclosed plans to diversify into the supply and retail of piped natural gas to the manufacturing and services sectors in Singapore, including industrial and commercial customers in the food and beverage industry. It obtained a gas retailing licence from the Energy Market Authority of Singapore in 2017.
The Group has yet to embark on this plan, but Teo said it is assessing markets in ASEAN and less-developed cities in China that do not have access to piped gas networks.
While Union Gas is well-positioned for future opportunities in the energy market, challenges abound.
“One of the biggest stumbling blocks is the fluctuating prices of LPG, CNG and diesel. We manage this by negotiating long-term contracts with our suppliers,” he said.
Another issue is retaining customers in a highly competitive industry. “We’ve established a client-centric model through a comprehensive customer relationship management system that enables us to track buying patterns. Our call-centre and mobile app also allow us to boost our response time to orders,” he noted.
The threat of alternative energy sources – such as solar power and electricity – continues to loom large. With greater awareness of environmental protection and sustainability, fossil fuels are facing increased public opposition.
“We believe there will still be uses for both diesel and CNG, and new applications for these energy sources will emerge,” Teo added.
“There’s been a lot of talk about electric vehicles, but we think it will take some time before they can take off in a big way in Singapore, as it requires substantial supporting infrastructure, such as charging stations, as well as improved performance and efficiency standards, before drivers are willing to make that switch.”
Navigating Obstacles
For Teo, the key to overcoming hurdles lies in his employees. “My staff keep me alive – not the other way around. While I am in the office, they are the ones going out in rain or shine to deliver LPG cylinders,” he noted.
“The CEO cannot take all the credit. I can provide leadership and direction, but the ones doing the real work are my staff.”
The father of three – two boys and a girl aged eight to 16 – is equally down-to-earth when it comes to his touchstones.
“As a person, one must learn to be grateful and humble,” Teo noted. “Whether you are successful or not in life – that’s not so important. Success comes with its share of obligations, such as helping those in need.”
When the 42-year-old is out of the office, he can be found at his koi pond or tending to his potted plants. Many life lessons can also be gleaned from his hobbies.
“Rearing koi is a lesson in nurture versus nature. I always challenge myself to grow the koi to as large a size as possible, and develop their scale colours to a spectacular level – it’s a fascinating process.”
Likewise, Teo believes cultivating a green thumb requires patience. A case in point is using fertilisers to boost the flowering process for some plants. “Such fertilisers produce blooms that are short-lived, and the petals are very brittle. On the other hand, if you are patient enough to wait for the plant to bloom in its own time, the flowers last much longer, and the petals are beautifully soft to the touch.”
In business, as in life, speed is not necessarily always an advantage. Instead, slow and steady progress can win the day, he pointed out.
“Always remember that life is a journey. Our ultimate destination is death, and that’s the same for everyone,” he said.
“The difference lies in encounters and observations you gather along the way. So slow down, and take time to accumulate those experiences in life.”
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Union Gas Holdings Ltd Union Gas is an established provider of fuel products in Singapore with over 40 years of operations. Its three key businesses comprise Retail Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), and Diesel. The Group is one of the leading suppliers of bottled LPG cylinders to domestic households in Singapore under the established brand “Union”. It also produces, sells and distributes CNG at its fuel station in 50 Old Toh Tuck Road under the “Cnergy” name. It is a leading supplier of CNG primarily to natural gas vehicles as well as industrial customers for commercial use. It also sells and distributes diesel to retail customers at its fuel station, as well as transports, distributes and bulk-sells diesel to commercial clients. |
The company website is: www.uniongas.com.sg.
Click here for the company's StockFacts page.
For the six months ended 30 June 2019 financial results, click here.
About kopi-C: the Company brew
Text: Jennifer LH Tan
Photo: Company file
kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.
For previous editions of kopi-C: the Company brew, please click here.
