Compilation

1.0 Corporate Profile

From a small tin-mining company established in 1974, Sunway Group

has thrived to become one of Malaysia’s most formidable property-

construction groups, with a multitude of established businesses

in more than 40 locations worldwide. Sunway Group's core

businesses consist of an Integrated Properties division which is

a consolidation of its Property Development, Hospitality, Retail,

Leisure and commercial properties in Malaysia as well as

overseas. Other business divisions include Construction, Trading

& Manufacturing, Quarry, Building Materials, Healthcare,

Education and Information Technology. The Group’s legendary

development which has garnered international recognition is the

thriving 800 acre Sunway Integrated Resort City in Bandar Sunway,

an engineering tour de force, located a mere 20 minutes from

Malaysia’s capital city of Kuala Lumpur. The township stands as

an icon for human endeavor, innovation and forwardness, as it was

literally resurrected from a derelict mining land. With over 7

million sq ft of world-class facilities, the Sunway Integrated

Resort City attracts an annual visitation of 30 million. The City

comprises more than 7,000 residential, commercial and light

industrial units. It is an ideal and highly sought-after place to

live, work, study, play and shop, and stands as the only

Integrated Resort City in Malaysia with six key components,

epitomizing Sunway’s trademark “Resort Living Within A City”

concept. It remains today as one of the region’s most preferred

1 Sunway Berhad Annual Report 2006-2010

tourist destinations. Visionary leadership, perceptive and

transparent corporate policies, and synergistic teamwork have

shaped the Group into becoming what it is today – a leader in all

areas it specializes in. Sunway is the only Malaysian

organization in the Asia Pacific region that was ranked sixth in

the Hewitt-Fortune-RBL Top Companies for Leaders 2007 in

recognition of its unflinching commitment to human capital

management. Underlying this worthy corporate endeavor is the

Group's philosophy of ‘business with a heart’- giving to the

community it serves through its award-winning corporate

responsibility (CR) initiatives primarily involving Education,

Healthcare and Community. Some of the more highly regarded CR

programmes include the formation of the Jeffrey Cheah Foundation

with an aim to bring high-quality and affordable education to the

needy and deserving. The Sunway Job Training Programme for

special children; Sunway Safe City Initiative and Recycling

Programmes amongst a host of other healthcare and charitable

activities.

1.1 Philosophy & Brand Values

Considered as one of our innovations, Sunway’s culture has been

built, upon decades, by its perceptive leaders. Sunway’s

unyielding pursuit of quality, innovation and excellence has led

Sunway Group to thrive through economic cycles, propelling us

towards our vision of being a business leader providing world-

class products and services that enhance stakeholders’ value.


People are our greatest asset. Here we transpose our corporate

philosophy of caring for Sunway’s own talent and human capital

into the communities we serve. We have more than 12,000

passionate employees ranging from engineers to educators,

hoteliers to doctors - all here for the same purpose. We are

passionate about creating a better future, supporting the

communities in more than 40 locations worldwide in which we

serve.

The color red in the Sunway logo exudes passion, strength and

confidence while the intertwined hand denotes unity, teamwork and

one shared vision. The gradient from red to orange demonstrates

the conversion of passion into energy

to achieve new milestones. The brilliant colored typeface and

italicized fonts illustrate the Group’s continued commitment in

its pursuit for excellence. This strengthened logo attests

Sunway’s strong track record, as well as its dedication to

nurturing people and enriching lives.

1.2 Vision

To be the leading regional property-construction group

Sunway Berhad holds leadership positions in a multitude of

industries, chiefly driven by its core businesses of property and

construction.

With a vision of becoming the region’s leading property-

construction group, we constantly innovate to deliver value,


build synergistic and sustainable relationships and achieve the

highest standards of quality and excellence.

1.3 Mission

Innovating to deliver value underpins our relentless

efforts to drive positive and sustainable change in the way

we work and operate to create values for all our

stakeholders.

Building synergistic and sustainable relationships is the

bedrock of the company’s ethos of nurturing our people and

developing meaningful relationships with external parties

including our business partners and customers towards

achieving business objectives, while keeping the interests

of our stakeholders.

Achieving the highest standards of quality and

excellence remains a founding value that we uphold and are

passionate about. We make individual and collective efforts

in aiming higher to achieve strategic business goals with a

commitment to the best quality and excellence.

Leadership

The visionary individuals who are helming Sunway’s

exponential growth in its many business are keenly regarded


as opinion leaders in their respective industries, each is

passionately steering their organizations towards seeking

new operational efficiencies to deliver stakeholder value,

building stronger connection to their customers, and finding

ways to translate a triple bottom line principle towards a

better future.

2.0 Problem Statement

Many Malaysian companies began to crumble since July 1997 with

results from the financial crisis that hit the Asia region. Asian

countries like Indonesia, Thailand, and South Korea were badly

affected. Malaysia as well, who was perceived to continue its


economic growth by having low inflation rate, around 3-4% per

year circa 1988 till 1996, was not excluded from the effect of

the recessioni. The openness of Malaysian economy due to largely

invested businesses abroad, mainly American and Japanese,

concluded in total of almost 70% of Malaysian Gross Domestic

Products (GDP). This openness which often attracted overseas

market that flourish Malaysian economy for the past years also

somehow became the worst curse in the 1997 crisis. Being overly

exposed and victimized by speculative attacks on Thai crisis,

Malaysia experience the dollar-ringgit rate plunge by over 37%

between July 1, 1997 and September 8, 1998. Result to this, GDP

also observed plummeted as low as -7.4% in 1998ii. One of the

contributing factor that succumbed construction and properties

business during the crisis is because of rapid credit expansion

by the banks in early 90’s. Private sector debt in Malaysia

increased by nearly 200 times, or by an average annual growth

rate of 61% from RM395 million in 1987 (0.5% of GDP) to RM75

billion in 1998 (26.5% of GDP)iii. By the end of 1996, this sector

accounted for over 45% of total outstanding bank loans. Therefore

when the crisis hit, the credit level was at its highest peak and

this severely affect the operation and investment of real estate

and construction industries.

Sunway was one of the companies who were gasping for financial

escape during this time. Sunway, who were known for property

development and construction as well as managing education


institution in early 1997, was having a difficult time keeping up

with the cash flow. As 1997 crisis has hit the company hard, they

are forced to let go one of many valuable arm of the company –

quarry business to a UK-based company, Pioneer, who are later

bought over by Hanson Plc. The decision of selling the quarry

business was a difficult one; because it was one of the most

efficient and lowest-cost quarry operators in the country. “Its

average production cost for quarry stones is about RM8.50 per

tonne compared with the average selling price of RM10.80 per

tonneiv. however it had to be done to raise cash due to backing

out from banking loans and from foreign investment. The founder,

Tan Sri Jeffrey Cheah emphasized that during the 1997 crisis, he

had to enforce “aggressive 4R strategies” to all the business,

namely Restructure, Re-capitalise, Re-strategise and Refocusv.

However among the business arms he managed, he refused to

compromise his education institution to regain the overall

company stability, as he did not want to toy with children’s

future. He had to recapitalize the overall business and recover

from losses by selling the quarries to the British corporation.

Sunway was Malaysia's largest quarry operator with about 25%

share of the local quarry market before the 1997-98 financial

crisis. 1.5 million tonnes a month of quarry stones and 17 plants

producing about 300,000 tonnes of pre-mix was produced from its

large 17 quarries at the time. However Cheah decided to exchange

their quarry business for RM360 mil cash with the condition that

they will not return to the business until end of 2005vi.


About ten years later, the financial turmoil hit again, this time

due to the collapse of the US financial institution which is also

affecting to negative growth in Malaysian GDP. Continuing its

trade activities post 1997 crisis, Malaysia remains its business

relationship with US, EU and Japan and few other Asean countries.

Malaysia’s main trading countries in 2007 were US, Singapore,

Japan, People Republic of China (PRC) and Thailandvii. In 2008,

Singapore recorded 13.1% of total trade with Malaysia; followed

by Japan 11.6%, US 11.6%, PRC 11.0% and at Thailand 5.2%viii.

Significant exposure to US market had directly affected Malaysia.

Malaysia was recorded to enjoy GDP growth rate between 5.4 up to

7.2% from first quarter 2006 until fourth quarter of 2007.

However, the GDP growth dipped its lowest point at 2009 at a

recorded -6.2%ix.Apart from its effect on major losses of

import/export industries, private investments also suffered

deficiency. From the Private Investment Indicators statistics of

Bank Negara Malaysia below, many sectors were experiencing

significant reduction at quarter four 2008. To make it worse, on

first quarter of 2009, almost all of sectors recorded negative

growthx:


Source: UNDP Report (2009: 14), Table 4. Data from Bank Negara Malaysia, Monthly

Statistical bulletin, July

2009.

In response to this circumstance, Sunway recorded negative growth

in its two financial year ended 2006 and 2007 report as tabulated

belowxi. Aware of the importance to instill its growth and

maintains performance at this critical period, Sunway has

implemented various strategies along the way. Next section shall

elaborate in length of how Sunway plugged in its strategic plan

into operations and what accomplishment Sunway had achieved.


3.0 Sunway Berhad Strategies

Sunway Berhad as organization needs a contingency of survival

perspective in relation to uncertainties in the environment. What

will keep them alive is innovation and change that is faster than

those by the toughest competitors and of the external environment

as well as improving quality. If the environment changes faster

than the organization, the latter may risk dying (1).

Delloite Malaysia Sdn Bhd has proposed to Malaysian companies a

number of survival strategies during economical crisis, such as

those that deal with determining required improvement cost. The


firm suggests strategies beginning with the most obviously

required ones, such as balancing short-term and long-term

improvements, choosing the right business model, protecting

strategic investments, and actively managing change (2).

Sunway Berhad with some help from Delloite Malaysia Sdn Bhd came

up with an overall strategy to address the challenges facing the

company during the economical crisis and at the same time lunch

company into the 21st century opportunities in the line with its

vision. Sunway used these key strategic during 1997 and 2008

economical crisis. (3)

These key strategic plans are:

Survival through cash preservation.

Increase productivity and cost reduction.

Operation efficiency (Increase operation efficiency through

reengineering of resources and process)

Aggressive marketing for new business.

Staff development and renewal for work excellence.

3.1.1 Survival through cash preservation

This is to ensure continuing availability and adequacy of cash

resources to fund the company’s operations and commitments. The

key is to ensure the company’s survival in this crisis period.

This achieved by a combination of tight credit control and

collection measure and stretching payments and setting creditors

in kind. (4)


3.1.2 Increase productivity and cost reduction

In order to remain competitive and profitable, the company needs

to reduce cost and increase productivity. All forms of costs and

expenditure, direct or indirect, will be re-examined as to their

causal effectiveness in achieving the desired returns results.

Productivity, the ratio of output to input, will have to be

enhanced in order for the company to survive under current

business severe and thin margins and even can be used in any

crisis tacking the company in the future.(4)

3.1.3 Operation efficiency

(Increase operation efficiency through reengineering of resources

and process)

Given today’s highly competitive market and its demand, the

company must operate efficiently in all aspects of its

operations, be it in direct job implementation or support

services. Apart from determining the delivery outcome of the

final product to the customer’s satisfaction, it will also

determine whether the company makes or breaks from the job.

Although having an ISO 9002 quality system in place since June

1997, there are still many areas of its operation, which can be

further improved and streamlined for greater efficiency. The

company will therefore be focusing on certain specific processes

and functions, which impact its bottom line. (4)


3.1.4 Aggressive marketing for new business

Securing new business in the midst of an economic recession is a

tremendous challenge that the company has to contend with in

sellers market, where the competitor is even willing to go below

cost. The company has to refine or re-think its marketing and

tendering strategies to win contracts. All factors in securing a

job will have to be thoroughly researched, capitalized and

swiftly executed if the company is to succeed. Alliances with

fellow contractors, suppliers and even customers will be

explored. Expanding the market both in depth and breadth,

including overseas will be pursued with greater vigor. Bearing

all of these in mind, the company will focus on the following

actions to secure continuing business by strengthening tender

submission, strengthening business sourcing, re-focusing on

smaller size jobs, rejuvenating relationships with public sector,

developing overseas market and cultivating local tie-ups. (4)

3.1.5 Staff development

Apart from having adequate financial resources and sound

operating systems, the human factor is without any doubt the most

important element that decides the success or failure if the

organization.

Proper staff development programs will continue to be a priority.

The provision of a conductive environment for staff to grow and


excel is equally important to counter prevailing negative

economic environment. The company therefore will enforce staff

training, Job work development, right man for the right job and

project incentive programs. (4)

3.2 Strength and Challenges

3.2.1 Sunway Berhad strength

As been mentioned in the previous section, key strategic plans

helped Sunway Berhad to survive during 1997 and 2008 economical

crisis; in fact there are other factors alongside these key

strategic plans helped the company to survive. These factors

constitute an ambush force of the Sunway Company. These factors

are:

Good reputation.

Good relationship with the government and the society.

Synergistic advantage.

Public-listed

Leadership/ capable management team.

3.2.2 Good reputation

Sunway Berhad has earned a respectable name and position in

Malaysia especially in construction industry. It enjoys such

excellent reputation through the high quality and efficient,

timely compilation of work done. In Fact it has won numerous


accolade and awards, including the “Prime Ministers golden hand

award” for three times in 1992, 1993 and 1994 as well as the

company was given the prestigious MS ISO 9002 award by Standard

and industrial research institute of Malaysia (SIRIM). (4)

3.2.3 Government and society relationship

iis.” Paper presented at the ISEAS-World Bank Workshop on

the Social Impact of the Asian Crisis, June 30, at the Institute of Southeast

Asian Studies,

Singaporeii Associate Professor of International Business, Director of the Southeast

Asia Business Program, University of Michigan Business School on “Malaysia’s

Response to the Asian Financial Crisis” during her testimony to the

Subcommittee on Asia and the Pacific Committee on International Relations,

U.S. House of Representatives, Washington DC, USA on June 16, 1999.

Prema-Chandra Athukorala, in East Asia in Crisis, edited by Ross McLeod and Ross

Garnaut, Routledge, London, 1998, p. 85, et seqiii Statistics provided by Tan Sri Ali Abul Hassan, the Governor of Bank Negara

Malaysia, in a speech delivered on 15th March 2000 at Bank Negara and

published in Insaf (2000), 29(1), p. 7iv Sun Inc. back in quarry business, Jan 15, 2005, The Starv Different crisis, different skills: Interview with Tan Sri Jeffrey Cheah,

Executive Chairman of Sunway Holding, The Edge 24 Feb 2009 by Emily Tanvi

vii MATRADE, Malaysia's Monthly Trade Performances 2007, available at

http://www.matrade.gov.myviii MATRADE, Malaysia's Monthly Trade Performances 2008, available at

http://www.matrade.gov.myix

x


Sunway Berhad as corporate citizen has always been supportive of

good social project initiated by the government. The government

being the biggest and most important customer and client must be

served well as the government project is also the people’s

project as whole.

Sunway Berhad contributes generously to charity organizations

such as the Malaysian Liver Foundation, Kiwanis, Malaysian Kidney

Foundation and National Arthritis Foundation. The company

contributions go beyond plain financial support including

volunteer manpower and the provision of venues for the

activities. The company maintains high standards of

accountability and corporate governance by keeping abreast with

the latest developments in corporate transparency, satisfying the

requisites of today’s increasingly sophisticated investors. (4)

(5) (6)

3.2.4 Synergistic advantage

Sunway group consist of a sizeable number of constructions

related companies which forms one of Malaysia’s most dynamic and

integrated conglomerates. This enables the corporation to tap the

invaluable experience and expertise of the group’s management

team, its financial strength, and reliable sources for material

and services from companies within the group. This synergistic

combination adds dimension to the corporation’s capabilities,

assured quality and shorter project completion period. (4)

xi


3.2.5 Public-listed

Being public listed in the KLSE (bursa Malaysia) in 1977, Sunway

Berhad is accessible to public fund and hence making expansions

much easier when opportunity comes by. Financially, the company

liquidity and cash flow are also enhanced, enabling to smooth

running and financial stability. Being public listed, Sunway

Berhad also attracts the investment of foreign investors, at the

same times, help to market the company’s services globally. (4)

3.2.6 Leadership/ capable management team

Among many other things to business success, there is probably

nothing more important than leadership and a good and capable

management team. A good leader is one who can inspire and

motivate his team to achieve everybody’s goal and resulting in

win-win situation. A good and capable management team would help

to realize the vision of its leader and in difficult time like

the in 2008, helped the company to pull through. The success of

Sunway Berhad as being one of the largest construction companies

in Malaysia has been the result of the leadership of its founder,

Tan Sri Cheah and its dynamic, dedicated and highly profession

team. Tan Sri Cheah is a vision oriented, hardworking

entrepreneur, who is able to inspire and motivate his team to

fulfill the company goals’ and target set. (4) (5) (6)

4.0 Sunway Challenges


4.1 Local challenges

Sunway Berhad must strengthen its position as the dominated

player in the local construction industry by forming strategic

alliance with international player. The reason is because the

local market is opening up due to trade liberalization and

globalization, while competitiveness in the local scene will

become together than ever. Through proper networking and

marketing relationship and cautions nurturing of relationship

with potential clients, Sunway should have an edge in local

market over its competitors. Private sector and smaller size

project should be an area to focus on since large projects are

few and competitive. In addition, It is time for Sunway to

venture to east Malaysia, Sabah and Sarawak as they are still

have a lot of development to go through. (4)

4.2 Global challenges

The 1997 and 2008 financial crisis was a blessing in disguise to

many construction industry players, including Sunway berhad. This

forces the players to look hard at trade liberalization and

globalization. The potential benefits, which Sunway berhad can

gain from the extension in world trade, will depend on its

capability to compete in the global market. As such, it is

imperative that Sunway position itself to face the challenges

ahead by forming strategic alliance for stronger market access,

keep abreast with technological development, create market riche


for the company capability, focus on technology innovation,

focusing on marketing strategies and at the same times place

greater emphasis on human resources development. In short, Sunway

must be competitive in cost, good quality in construction work

and able to deliver project in time. (4)

4.3 Results of the applied strategy

The reporting of the company’s achievements for the crisis

following years is discussed below to show the success of the

applied strategies. As mentioned earlier, the corporation include

different segments named as: construction, quarry, trading and

manufacturing, building materials and property development.

4.4 Great breakthroughs of 2008

4.4.1 Construction – A Success Story with RM4 billion

Outstanding Order Book

For FYE2008, the Construction Division successfully

completed several projects including Phase 2 of the Sunway

Pyramid Shopping Mall, Zuellig Distribution Warehouse,

Goldhill Services Suite Condominium located at Kuala

Lumpur’s Golden Triangle and part of the Kuala Lumpur -

Putrajaya Highway. [ 1 ]


The Division’s total outstanding construction order book

reached a record level of RM 4 billion, of which more than

60% was derived from overseas projects.

The most notable and recent accomplishment was the securing

of the RM1.8 billion contract in Abu Dhabi for the proposed

Rihan Heights - Arzanah Development construction project.

This would significantly enhance the Group’s earnings

potential.

On the local front, the Construction Division was awarded

contracts that include the design and build of the

Government Office Buildings at Putrajaya (RM520 million),

the construction of the aviation component manufacturing

factory in Subang (RM119.8 million), construction of the

remaining infrastructure works in Precinct 11 of Putrajaya

(RM110 million) and the sub-contract works for the

privatisation of South Klang Valley Expressway (RM264

million).

Amidst global uncertainty and the local government’s prudent

spending, the construction sector will remain challenging.

However, with the RM4 billion outstanding order book on

hand, the Group is confident that the sustainability of the

Construction Division’s contribution will remain intact. The

construction margin is expected to improve in view of the

gradual reduction in prices of raw materials.

4.4.1 Quarry – Doubling Revenue20 Sunway Berhad Annual Report 2006-2010

The Group is one of the largest quarry market players in the

Klang Valley. The Quarry Division recorded strong margins

during the financial year on the back of a surge of

business, expansion of its operations to strategic locations

in the country and the supply contracts overseas. The

revenue from quarry operations has more than doubled within

a year from RM165 million in previous financial year to

RM334 million in FYE2008.

With the acquisition of quarries in Melaka and Taiping,

Perak in FYE2008, 2 quarries in Vietnam and the new quarry

operations in Trinidad and Tobago, the Group now operates a

total of 11 quarries. The Division’s contribution during the

FYE2008 also benefited from its contract to supply 2 million

tons of quarry stones to Singapore. The Division’s quarry

operations in Trinidad and Tobago, which commenced in the

first quarter of FYE2009 has a secured contract to supply a

minimum of 1 million tons of aggregates per year.

The supply contracts in Singapore and Trinidad and Tobago

will continue to form the corner stones for the earnings

base of the Quarry Division. The Quarry Division continues

to explore acquiring more quarries particularly those in

close proximity to high growth areas.

With implementation of strategic business schemes, the Group

aspires to emerge as a key regional quarry player with


presence in Singapore, Vietnam, Trinidad and Tobago, as well

as other countries.

4.5 Trading and Manufacturing – Trading Moving Upstream and

Regional Expansion Down Under

The Trading and Manufacturing Division’s strong brand name

and extensive regional network in Malaysia, Singapore,

Thailand, Indonesia and China, have earned it a place as a

major regional player. In China, in just over a period of 2

years, the Division has successfully established several

manufacturing facilities for the production of various

industrial products.

In line with the Group’s globalisation strategy, the Group

entered into strategic joint ventures with reputable

partners during the year. This includes the partnership with

a company related to the Korean Daechang Group for the

manufacturing of machinery parts in Anhui, China. The Group

also acquired a 90% equity interest in an Australian

company, Total rubber Limited, a 29-year established hoses

and industrial parts trading and manufacturing group, that

is expected to provide the Group with a jump-start in

customer base down under and at the same time accord wider

range of synergistic benefits in the Group’s regional

marketing and manufacturing business.

Amidst the global economic uncertainties, the Trading and

Manufacturing Division’s global expansion strategy will22 Sunway Berhad Annual Report 2006-2010

support the target annual robust growth rate of 20% that it

has enjoyed over the last 3 years. The selective investments

are expected to further strengthen the Division’s position

in the regional market.

4.5.1 Building Materials – A Turn Around and New

Earnings Dimension

The financial results of the Building Materials Division

surpassed expectations, improving its contribution to the

Group’s bottom line during the year. With the main catalyst

being the improved operations efficiency and a re-focus in

sales strategy, it was clearly a turnaround story for the

Group’s concrete pipes division, moving from loss-making

into having increased growth and profitability.

The Division’s spun-pile business, via a venture with

Rongyao Investment Development Co. Ltd in Zhuhai, China, is

poised to start operations on a large scale. This will

increase the Division’s building materials’ businesses

capacity in China in FYE2009.

The success in reducing production cost in the Group’s

pavers and vitrified clay pipes division through process re-

engineering; added with the contribution from the Group’s

new spun-pile operations, the results from this Division is

expected to further improve in the next financial year.


4.5.2 Property Development – Repositioning and the

Beginning of Overseas Contributions

This Division made its first overseas foray into Singapore

during the FYE2008 when it entered into a 30:70 joint

venture with a Singaporean property developer for the

Design-Build-Sell Scheme (“DBSS”) public housing project for

the construction of 3 towers of 40-storey residential units.

The project, in the strategic location of Boon Keng, was

over-subscribed during its launch in January 2008. Adding to

this new earnings dimension, the Group through its 30% owned

joint venture, has secured a second DBSS public housing

project in Toa Payoh for 5 towers of 40-storey and 46-storey

residential units from the Housing and Development Board of

Singapore. This project is expected to be launched in the

fourth quarter of FYE2009.

The Group also entered into the China property scene via

Sunway Real Estate (China) Limited, an alliance with Sunway

City Berhad, in the RM473 million 17-acre property project

in the central business district of Jiangyin New Harbour

City in Jiangyin City of Jiangsu Province. This residential

cum commercial project, located in a second tier city about

140 km from Shanghai, has lower risks due to the surging

demand and lower speculative factors. Leveraging on Sunway’s

strong presence in the China market as well as on Sunway’s


strong branding, this strategic alliance will provide vast

synergistic opportunities for the Group.

In the local market, the Group has repositioned its business

direction to focus on areas with emerging demand and high

growth in property. The Group will soon launch new projects

in Taman Melawati and Sungai Long, both in strategic

locations in the Klang Valley. Both these projects target

mid-to-high income earners who are looking for an upgrade to

quality homes for a secured living environment and an

enhanced lifestyle. In view of the downturn in the property

market, the Group will adopt a market driven strategy by

only building properties with high take-up rates. The Group

looks forward to an enhanced performance from this Division

in the next financial year as the Division re-aligns its

focus on property projects displaying strong growth.

4.6 Great breakthroughs of 2009

Sunway recorded a revenue of RM2.64 billion with net profit of

RM110 million for the 18-month period ended 31 December 2009. The

financial period under review is for a period of 18 months due to

the change of financial year end from 30 June to 31 December. The

Group’s earnings were mainly driven by the construction division,

followed by the property development, quarry as well as the

trading and manufacturing divisions.


4.6.1 The construction division

The Construction Division, being the key driver to the

Group’s profitability, continued to achieve healthy results

in FPE2009. The early venture of the Construction Division

into the international market has proven to be beneficial to

the Group especially in a year when the local construction

sector experienced a slowdown in the awarding of major

construction projects. As a result, there was considerable

recognition of profits from its construction project in Abu

Dhabi as well as from the supply of precast concrete

products in Singapore. With an outstanding order book of

RM3.0 billion as at end of 2009 and the promising outlook of

order book replenishment in 2010, the Division will continue

to be the key earnings driver to the Group in the coming

year.

4.6.2 Quarry division

Having a strong correlation with the construction sector,

the quarry sector in Malaysia and Vietnam similarly

experienced a slowdown in demand during the financial

period.

In addition to the softened demand, the Quarry Division’s

export contract to supply stones to Singapore came to an end

in the early part of FPE2009. However, the Division’s quarry

in Trinidad and Tobago, where it has a 5-year contract to

supply a total of 5 million tons of stones to the local26 Sunway Berhad Annual Report 2006-2010

government during the tenure, commenced operations in late-

2008. Supply had picked up during the last quarter of the

financial period. Despite the tough operating environment

which resulted in lower demand and increased price

competition, the Group’s trading and Manufacturing Division

was able to sustain its profitability level, again largely

attributed to the success of its overseas market penetration

strategy which includes countries like Singapore, Indonesia,

China and Australia. Despite the global crisis, the number

of branches has increased from 26 branches at beginning of

FPE 2009 to 37 branches by end of the financial period with

most of the branches contributing positively to the bottom

line.

4.6.3 Trading and Manufacturing division

The trading and manufacturing division continues to

contribute strongly to the Group’s performance.

Having earned its place as a major regional player with

established presence in South East Asia, China and

Australia, the Group expects to further expand the division.

A key advantage of our trading and manufacturing division is

its excellent business model which is supported by strong

information technology system. This allows the division to

replicate its business model, by opening new branches in new

cities and countries.


In China, the division has recorded sustainable revenue with

a large customer base spread over several major cities. It

is planning to further expand its branches to Guangzhou,

Chengdu and Tianjin to sell hoses, fittings and heavy

equipment parts. Our venture upstream into the manufacturing

of industrial and undercarriage parts will also provide the

Group with greater synergistic benefits.

The division’s heavy equipment trading arm was recently

recognised as the ‘Best International Partner for Concrete

Pumping Equipment’ by Sany International, the largest

concrete machinery manufacturer as well as the top 50

construction equipment manufacturers in the world.

Sunway's Trading and Manufacturing division's vast

distribution network covered over 6 countries in the ASEAN

region, China and Australia, is the main driver of its

sustained performance. The division is driven by its passion

in providing the best value product from the best

manufacturer via global sourcing to continue expanding its

7,600 customer base in 36 countries.

4.6.4 Building Materials Division

The Group’s Building Materials Division recorded losses in

FPE2009 arising mainly from its spun-pile and cavity wall


operations, which were at its infancy stage. With an

improving operating landscape, the Group’s Building

Materials division expected to increase its contribution to

the Group’s bottom line in 2010 onwards.

4.6.5 Property Development Division

Efforts to re-position the Property Development Division

into a mid to high-end developer demonstrated great success.

Together with the division’s venture into the Singapore

property market, the contribution of this Division to the

Group’s results has achieved a significant growth. The

prospects of the Division remain on an upward trend with

contributions from its second and third Singapore housing

project in Toa Payoh and Jalan Senang respectively, as well

as from its up-coming launches in Malaysia.

4.7 Overall financial report of Sunway after the crisis

The great achievements of the corporation continued for the

following years which mean that the management team could

successfully overcome the crisis. In order to make it clear, the

five-year financial highlights since 2006 to 2010 for operating

results Figure 1 and profit and margin trend Figure 2 are

illustrated as follows:


Figure 1: Five-year financial highlights for operating results

Figure 2: Five-year profit and margin trend

In order to clarify the role of each segment in the success of

the Sunway Holding Berhad, Figure 3 is represented in which the


revenue and operating profit performances are calculated based on

different segments of the business.


Figure 3: Segmental performance

5.0 Conclusion

Thus, Sunway Group has made its foray to Sri Lanka property

market with the signing of agreement with the Dasa Group of Sri

Lanka for a RM 250 million mixed development project in Colombo.

Other than that, Group`s third property development project in

Singapore, being its first private development project, called

the Vacanza@East which has seen impressive take-up rates sinct

its launch. With main contributions of those companies, it could

contribute more than 80 percents of its profits contribution. It


shows that, Sunway Holdings had take up the right steps on its

strategies in pass several years.

References

Jack: Straight from the Gut by Jack Welch and John A. Byrne, 2003 [ 1 ]

Aguilar, O. and Yadavalli, S. Seven Secrets to Downturn Survival, Deloitte Development LLC,2008 [ 2 ]


http://www.amazon.com/Jack-Straight-Gut-Welch/dp/0446690686/ref=la_B000AP9HAO_1_2?ie=UTF8&qid=1349678020&sr=1-2

INTERNATIONAL JOURNAL Of ACADEMIC RESEARCH (SURVIVAL STRATEGIES OF CONSTRUCTION COMPANIES IN MALAYSIA DURING TWO PERIODS OF RECESSION) by Abu Hassan Abu Bakar, Mohamad Nizam Yusof, Aidah Awang, Aulina Adamy. [ 3 ]

Research paper " survival strategy of Sunway construction Berhad in 1997 financial crisis" by CHOW KOK LEONG. [ 4 ]

Sunway Berhad annual report 2006

Sunway Berhad annual report 2011

Abubakar, Syarisa Yanti. 1999. “Migrant Labour in Malaysia: Impacts and Implications ofthe Asian Economic Crisis.” Paper presented at the ISEAS-World Bank Workshop onthe Social Impact of the Asian Crisis, June 30, at the Institute of Southeast Asian Studies,Singapore. [ i ]

Associate Professor of International Business, Director of the Southeast Asia Business Program, University of Michigan Business School on “Malaysia’s Response to the Asian Financial Crisis” during her testimony to the Subcommittee on Asia and the Pacific Committee on International Relations, U.S. House of Representatives, Washington DC, USA on June 16, 1999. [ ii ]

Prema-Chandra Athukorala, in East Asia in Crisis, edited by Ross McLeod and Ross Garnaut, Routledge, London, 1998, p. 85, et seq [ iii ]

Statistics provided by Tan Sri Ali Abul Hassan, the Governor of Bank Negara Malaysia, in a speech delivered on 15th March 2000 at Bank Negara and published in Insaf (2000), 29(1), p. 7 [ iv ]

Sun Inc. back in quarry business, Jan 15, 2005, The Star [ v ]

Different crisis, different skills: Interview with Tan Sri Jeffrey Cheah,

Executive Chairman of Sunway Holding, The Edge 24 Feb 2009 by Emily Tan [ vi ]

MATRADE, Malaysia's Monthly Trade Performances 2007, available at

http://www.matrade.gov.my [ vii ]

MATRADE, Malaysia's Monthly Trade Performances 2008, available at

http://www.matrade.gov.my [ viii ]

Bank Negara Malaysia, Quarterly bulletin, 2006-2009 [ ix ]

UNDP Report (2009: 14), Table 4. Data from Bank Negara Malaysia, Monthly Statistical bulletin, July


http://www.matrade.gov.my/

http://www.matrade.gov.my/

2009. [ x ]

Sunway Berhad Annual report, 2009 and 2010 [ xi ]


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