IT must be tough to follow in the footsteps of the late Tan Sri Lee Loy Seng, whose passion for the plantation business had helped build Kuala Lumpur Kepong Bhd (KLK) into one of the country's largest oil palm growers. Then again, it is unfair to expect his son, Datuk Seri Lee Oi Hian, to go down the exact same path.

The industry and the country have changed considerably since the elder Lee took over an early incarnation of KLK in the early 1970s. For example, the primary crop then was rubber instead of oil palm. When Oi Hian was appointed KLK chairman in 1993 – he was already the chief executive officer at the time – to succeed his father, the company has become a vastly different creature. It had just gone into resource-based manufacturing and property development, and would soon spread its wings to Indonesia in a major way.

He had long been groomed for the job. He joined the company as an executive in 1974 and was appointed to the board of directors in 11 years later.

Under Oi Hian, KLK continues to be an essentially conservative outfit. It is soundly managed but rarely makes a splash with big corporate exercises. One exception was when it acquired American retailer Crabtree & Evelyn in 1996 for US$60mil, although the results have not been great so far. In fact, KLK is working on turning around that investment. However, it can be argued that an international business with a solid brand is still a valuable asset.

KLK celebrated its centenary last year, and that is perhaps as good a time as any to enter a growth phase. That may well be what's happening.

The young age profile of its palms promises good earnings in the years to come, with the expected strong crude palm oil (CPO) prices providing the extra push. The company has also been in a buying mood in recent years, thus significantly enlarging its plantation land bank in Malaysia and Indonesia. On Feb 2, the company announced two more proposed acquisitions involving 22,400 hectares of land in central Kalimantan.

KLK has also invested a lot in the downstream of the plantations industry, mainly in oleochemicals and cocoa products. Last year, the company opened a fatty acids factory in China.

Investors fancy KLK because of its sturdy management and huge CPO exposure. That explains the 24% rise in its share price this year.

Lee is a respected figure in the palm oil industry and has served as chairman of the Malaysian Palm Oil Council chairman for several years now. He has a Bachelor of Agricultural Science degree from Universiti Malaya and is a Harvard MBA holder.

He and his brother, Datuk Lee Hau Hian, control KLK via another listed company, Batu Kawan Bhd. - By ERROL OH

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