Revitalised Damansara Realty eyes new markets
Lim Cian Yai 
The company’s parking management division, grouped under Metro Parking, manages 60,000 parking bays in Malaysia, Singapore and the Philippines

Damansara Realty Bhd, which staged an impressive turnaround in FY17 after three straight years of losses, is seeking to expand its footprint to more countries in the region.

The property development cum facility management group is eyeing a move into the Middle East. It already has a presence in Singapore and the Philippines.

The company rebounded in its financial year ended Dec 31, 2017, posting a net profit of RM17.02 mil, against a net loss of RM27.12 mil the year before.

Brian Iskandar’s appointment signalled the start of Damansara Realty’s turnaround

In FY16, it suffered its biggest loss in recent years – RM27.88 mil, from RM2.83 mil loss a year earlier.

It was only when the company roped in Brian Iskandar Zulkarim as its new group CEO and introduced a new management line-up that its fortune reversed.

Having gone through such a bumpy ride, it is understandable that Damansara Realty is now a tad cautious in expanding.


Gulf potential

Chief financial officer Zain Azrai Zainuddin says the company is open to explore opportunities in new markets but within its means.

“We do not want to bite off more than we can chew. We want to work within our strengths and capabilities. Maybe we want to look at the Middle East next,” he adds.

Zain says the company is exploring opportunities in new markets including the Middle East

If this materialises, it would be the group’s first attempt to venture into the gulf region which spans across 18 countries and has a combined population of 370 million.

Its overseas expansion is likely to be anchored by its integrated facility management (IFM) and project management consultancy (PMC) divisions, in light of their track records in dealing with foreign clients. Meanwhile, its property division focuses mainly on the local real estate market.

In Saudi Arabia alone, the facility management (FM) market is expected to reach US$49.82 bil (RM195.6 bil) by end 2030, according to a report by the Middle East Facility Management Association last October.

The report highlights the critical role of facility managers in ensuring smooth operational performance of buildings and infrastructure assets. By outsourcing maintenance works to FM companies, businesses can focus on core operations hence increase their competitiveness.

Damansara Realty’s IFM segment provides engineering-related, hygiene and cleaning, as well as parking management solutions to asset owners via three key subsidiaries – TMR Urusharta (M) Sdn Bhd, HC Duraclean Sdn Bhd and Metro Parking (M) Sdn Bhd.

Its major clients include Petroliam Nasional Bhd (Petronas), Johor Corp, Malaysia Airports Holdings Bhd, Permodalan Nasional Bhd and Telekom Malaysia Bhd.


Managing car parks

Meanwhile, its parking management division, grouped under Metro Parking, has a solid record of managing 60,000 parking bays in Malaysia, Singapore and the Philippines.

Last year, it achieved a key milestone in Singapore by securing a RM56.6 mil contract from Singapore Sports Council (SSC). Its 70%-owned subsidiary Metro Parking (Singapore) is tasked to operate and manage car parks for the SSC’s sport centres over five years.

Metro Parking is among the top three car park management companies in Malaysia with more than 80 parking management contracts, and one of the top 10 in Singapore. It is also a key player in the Philippines with over 50% market share via 30 parking concessions.

That said, the Singapore operation was unprofitable as of FY17, with a RM958,000 net loss despite higher revenue.

In contrast, the Philippines business posted a 62.4% profit growth to RM3.2 mil from RM1.97 mil, on the back of a 18.46% rise in revenue to RM32.59 mil.


Strong IFM growth

Brian Iskandar said in a press briefing that growth this year will largely be from the IFM segment due to the cautious property situation.

“We are still a property company but, while we are pushing all areas for growth, we would like to be cautious in this area for the time being,” he said. Damansara Realty started off as a property company in the 1960s before IFM emerged as its breadwinner.

For this year, Zain says the company is projecting a 10-15% “modest growth” in revenue and net profit, driven mainly by its IFM segment.

In FY17, the segment’s revenue grew 28.83% year-on-year to RM218.16 mil, from RM169.33 mil a year ago. The bottom line turned around with a RM6.67 mil profit versus a loss of RM6.6 mil. The IFM division contributed 88.8% to group revenue of RM249.48 mil.

The better revenue was due to higher ongoing contracts from Menara TM, Dataran Maybank and Etiqa buildings. Apart from buildings, Damansara Realty also manages infrastructure assets like MRT stations, the Senai International Airport and KL International Airport.

It aims to secure jobs valued between RM1 mil and RM120 mil per annum this year. The value of IFM contracts varies greatly, depending on size and scale of facilities to be managed.

A large-scale contract could fetch over RM100 mil, such as the RM124 mil Petronas’ Refinery and Petrochemical Integrated Development (RAPID) job it secured in September 2016. The 38-month job entails the maintenance of the RAPID executive village, management office, facilities and infrastructure.

The improved financial metrics will definitely give a boost to Damansara Realty’s overseas venture.

Its current ratio, a parameter to gauge a company’s ability to repay its liabilities via assets, improved to 1.01 times as at end-FY17, from 0.36 times a year ago. It overturned its net current liabilities position of RM155 mil to a net current asset of RM1.5 mil.

The better ratio was after it entered a settlement agreement with Johor City Development Sdn Bhd (JCDSB) last year. The bulk of the liabilities then was due to RM141.57 mil owing to JCDSB. This has resolved the going concern issue raised by its auditor in May last year.

This article first appeared in Focus Malaysia Issue 274.