I sat in the room, looking around. This definitely did not look like a room belonging to someone who was paying a 9% dividend. 

It was a humble room in the outskirts of Clementi, and one which I’d traveled 1.5 hour from Hougang to look for. And that morning, I was surprised at what they’d done. They had just raised the dividend, and I had to thank them for paying the cheap coffees I was having around Hougang.

Why keep the dividend despite lower profits?

And when I asked the question about why they’d raised the dividend despite profits falling, the CEO, Mr Foo Suan Sai, shared about how they’d kept a bigger cash pile over the last 2 years to look at the impact of the tariffs. Now that that was over, they were more free to disburse cash.

Mr Foo laughed loudly when he shared about the dividend, and seemed to signal the confidence that this would continue at the same rate, or not to keep increasing.

Moving from China to ASEAN

Mr Foo is no fool. He might laugh loudly but you know that behind his genial facade lies a fierce, hard-charging mindset to win in the markets that he goes to. That’s why during this 2026 AGM, he shared that over the years, he’d changed his strategy from expanding within wider China, to moving more aggressively within the ASEAN market.

He didn’t share more, but I suspect I know why. China can be very sensitive about using US cybersecurity software, and might not enjoy such sensitive sectors being placed in the hands of a US company. They can build the technical expertise to build software that does the same.

But ASEAN may not have the same. They would find it easier to use something off the shelf.

That was also why he’d changed the sales director who previously headed China, to the one that was now heading the ASEAN region’s growth.

In Mr Winston Goh’s place is now Mr Sim, who heads the ASEAN business.

Just look at how far Vietnam has grown, whilst China’s revenues no longer account for such a big part of its business.

Isn’t Singapore looking toppish?

The natural question then is whether Singapore’s revenues look toppish, and whether there’s still avenue to grow that.

Last year, they guided that because of the economic uncertainty, companies held off cybersecurity upgrades. Many international companies were also beginning to offshore and move out of Singapore. 

But this year, with the renewed optimism in the economy, they are looking quite confident - at least confident enough to raise their dividend per share.

There is the worry that companies would not upgrade their cybersecurity infrastructure but a play in Multi-Chem, is essentially a play of whether Singapore would continue to attract top companies to set up here. If these companies continue to do so, they would definitely, definitely buy cybersecurity solutions.

Who’s next in line?

Of course, the other question at the top of my mind was whether succession planning was happening well. If you look at the two Foos, the elder Foo is more of the charismatic salesman, whilst the younger Foo is more soft-spoken, and a technical expert.

The venerable Foo assured me that the younger Foo had just returned from the US, meeting their suppliers, wining and dining them, and maintaining a good relationship that would allow them to keep distributing through them.

In a distribution business like Multi-Chem, they are dependent on these suppliers building on the cutting edge of technology to supply to them.

The Multi-Chem moat?

But what is Multi-Chem’s moat? Can’t everyone else just set up a distribution business and sell software? I heard three that morning.

Firstly, there was the fact that they were listed. No other cybersecurity distributors are listed in Singapore, or ASEAN, for that matter. That brings a degree of trust around their compliance, that makes it safer for customers to trust them.

Secondly, they sell to the integrators. These are your IT consultancies like Tata, NCS, that need to put a cybersecurity software into the computers, or the bank systems they build. Whilst they may not be the exclusive supplier of these solutions, I am guessing that because of Multi-Chem’s relationship with these cybersecurity manufacturers, they are able to secure bulk discounts.

And lastly, and most importantly, software as a service is an incredibly sticky business. Make no mistake, this is a compliance function that requires multiple layers of risk analysis. If you want to change your providers, you’ve to prove that your services are not going to be hacked, or experiencing the same Denial of Service as what others may have had.

So you just go ahead and do the same thing your predecessors have done, even if they keep increasing the price.

Not focusing on the share price, but just focusing on the EPS, and DPS

At Multi-Chem, they have been very focused on the business, rather than juicing the short-term share price of the company. That morning, many were asking them about why they did not change their stock classification, or stock name, to better reflect their cybersecurity business, to increase the P/E ratio.

But I always believe good things come to those who find them, you don’t have to keep shouting about it if it’s good.

At the same time, I saw someone from Amova come across to Mr Foo and ask why it was so hard for their analysts to get through to them.

No one was picking up their calls, answering their emails, and so the man just decided to pick up shares from the open market and meet Mr Foo himself.

Mr Foo shared about how he’s often spoken to people from different fund managers, who’ve then come to tell him how to run the business, and the changes to make.

He didn’t think those suggestions were useful, and thus decided that it wasn’t the smartest thing to engage with those comments.

I think that’s smart.

The story of RJR Nabisco and how it was the epitome of corporate greed when it was taken out by the leveraged buyout showed how fund managers, aren’t always the best operators.

But also, that they aren’t always the operators with the best heart.

Being business owners with a heart

Last year, as we were heading to the Q&A of the meeting, Ms Han shared,

sorry, but I’d have to pick up my grandkid at 1pm.

It was a tender moment, but one that showed their values. Over the years, even with the PCB business, they didn’t immediately sack all the long-serving staff.

But they ensured that they were well-taken care of, at retirement age, before closing the business. And that actually harmed their profits, rather than helping it.

And so they kept the PCB business going over the past decade, even though they could have closed it much earlier.

Yes, they might not be a sexy business, but they are a good business.

And I think that’s the most important thing.