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Seize the day to maximise returns: Serial System boss

In exploring and capitalising on opportunities that emerged along the way, Serial System CEO Derek Goh has transformed a one-man operation into the largest electronics components distributor listed on Singapore Exchange, with annual revenue of more t
In exploring and capitalising on opportunities that emerged along the way, Serial System CEO Derek Goh has transformed a one-man operation into the largest electronics components distributor listed on Singapore Exchange, with annual revenue of more than US$1 billion (S$1.34 billion).ST PHOTO: YEN MENG JIIN

CEO Derek Goh looks out for opportunities, and they could be in electronics or... durians

When opportunity knocks, how will you answer?

This is one question that frequently swirls at the back of Mr Derek Goh's mind, keeping the chief executive of Serial System focused on what he enjoys most - growing profits and maximising returns for shareholders.

By spending his entire career exploring and capitalising on opportunities that emerged along the way, Mr Goh has transformed a one-man operation into the largest electronics components distributor listed on Singapore Exchange, with annual revenue of more than US$1 billion (S$1.34 billion).

"Life isn't fair, and money is hard to earn. I wasn't born with a silver spoon in my mouth. In fact, all I had was a rusty spoon - one which I had to polish very hard," he said.

"So when opportunities come your way, better grab them with both hands, because when they're gone, you might regret it."

Mr Goh, who loves tinkering with electronic components, founded Serial System in 1988 in the back room of his wife's florist shop. At the time, the florist business was profitable, but he dreamt of building something more substantial.

With dogged determination, he established Serial's electronics distribution network from scratch, and in 1997, listed the company on SGX's then-Sesdaq second board. Three years later, the company was upgraded to the mainboard.

STRATEGY IS KEY

In Singapore, if you can work, you won't starve. But if you want to eat abalone or bird's nest and drink Dom Perignon, working hard isn't enough. You need a real strategy.

SERIAL SYSTEM CEO DEREK GOH, on the importance of maintaining focus and discipline, and taking the business further.

But that moment of triumph proved brief.

Shortly after, the company entered a period of turmoil, triggered by Mr Goh's handover of the business to his long-time buddy, who took the reins in September 1999.

The next few years were marked by boardroom battles, operating losses and broken relationships with customers and suppliers.

In 2001, Mr Goh wrestled back control, and began the arduous process of returning the business to profitability.

"Our banks, suppliers and customers were all worried. I had to reassure each one of them, and restore their trust. It was a difficult time for my family as well - everyone could feel the tension," he recalled.

DRAMATIC COMEBACK

Since then, Serial's comeback has been nothing short of remarkable. Over the past 16 years, the group has chalked up a compounded annual growth rate of 26 per cent, with revenues breaching the US$1 billion mark in 2013.

Three years ago, Serial entered a new growth chapter by diversifying into the distribution of consumer products. Its current portfolio comprises household appliances and lifestyle goods, ranging from camera accessories and timepieces to hard disk drives.

The group now employs more than 1,000 people in 53 offices and 13 warehouses across Asia.

It has over 7,000 customers from a diverse range of industries, including consumer electronics, telecommunications, electronics manufacturing services, automotive and medical. "To get to where we are today, we adopted a three-pronged strategy," said Mr Goh. "We expanded geographically, and upgraded our operations through automation.

"We also widened our range of suppliers, taking on second-and third-tier ones. With more suppliers, we broadened our product range and added new clients."

The road ahead, however, remained bumpy. In March last year, Serial was placed on the SGX watch list for failing to meet the minimum trading price of 20 Singapore cents required for companies on the mainboard.

Undeterred, Goh Mr doubled his efforts to boost performance, and before the close of the year, Serial exited the SGX watch list.

In the strongest sign yet that the group remains a key partner of leading semiconductor suppliers and electronics manufacturers, its full-year revenue hit an all-time high of US$1.4 billion, representing a 15 per cent year-on-year increase.

FOCUS AND DISCIPLINE

Looking back on the group's milestones and speed bumps, Mr Goh underscored the importance of maintaining focus and discipline.

"In Singapore, if you can work, you won't starve. But if you want to eat abalone or bird's nest and drink Dom Perignon, working hard isn't enough. You need a real strategy."

And a lack of discipline can be your downfall, driven by one of the most pervasive qualities of human nature - greed.

"A common cause of business failure is poor discipline. It takes many years to build an empire, but only a year or two for it to burn to the ground," he said.

Despite challenges in the operating environment, the group's outlook remains bright. Serial is targeting revenues of US$5 billion to US$10 billion over the next decade. "I believe US$5 billion is 100 per cent achievable in the next five years," Mr Goh said.

Most of this growth will come from the steady expansion of Chinese demand.

"Hong Kong and China currently account for 55 per cent to 60 per cent of our group revenues, with Singapore contributing only 3 per cent to 5 per cent."

To grow the electronics distribution business, Mr Goh plans to use both organic and inorganic means.

"As venturing into the United States or European Union via organic growth is very tough, mergers and acquisitions are the way to go, but obviously, there are integration risks with this approach," he said.

LONG-TERM SURVIVAL

More importantly, the group's focus on diversification will ensure its long-term survival, Mr Goh noted.

Serial has ventured into hospitality and healthcare solutions, which includes its flagship electronic Meal Ordering System for local hospitals, as well as the assembly and distribution of medical devices.

It holds a 27.3 per cent stake in SPL Holdings Australia, which provides laundry services to hotels, hospitals and restaurants in key Australian cities.

The group also owns 21 per cent of Tong Chiang Group, a Singapore-based food manufacturer that provides delivery of home-cooked meals known as tingkat, bento boxes for corporate customers, as well as halal and non-halal catering for events.

Going forward, Serial aims to raise its stake in its laundry-services associate to become a major shareholder, and make further inroads into food distribution to boost income streams, Mr Goh said.

In September, the group announced its subsidiary was taking a 27.5 per cent stake in a company that manufactures, processes, trades and exports durian puree and durian-related products.

"While my semiconductor business has low profit margins, the durian business is profitable, and China is a large potential market.

"As an entrepreneur, I'm always looking for good returns on investment," said Mr Goh, whose familiarity with the food industry dates back to his teenage years, when he used to help out in his father's hawker stall.

• This is an excerpt from Singapore Exchange's Kopi-C: The Company Brew, a regular column featuring C-level executives of SGX-listed companies. Previous editions can be found on SGX's My Gateway website www.sgx.com/mygateway

A version of this article appeared in the print edition of The Straits Times on November 27, 2017, with the headline 'Seize the day to maximise returns: Serial System boss'. Print Edition | Subscribe