This article first appeared in The Edge Financial Daily on August 16, 2019
PETALING JAYA: After posting a sharp increase in first half of financial year 2019 (1HFY19) net profit, Damansara Realty Bhd is optimistic about reporting higher full-year earnings.
“In the first half of 2019, we showed that we tremendously outperformed 2018 in terms of profit,” said its group managing director Brian Iskandar Zulkarim. “For [the full year], we want to continue the momentum and show that we can grow much higher.”
Speaking at a press conference to announce Damansara Realty’s results for the second financial quarter ended June 30, 2019 (2QFY19), Brian said the group’s target for the full year is to achieve an increase of 8% to 11% in profit before tax (PBT).
In addition, it expects its earnings before interest, taxes, depreciation and amortisation (Ebitda) to grow by 12% to 15%, and profit after tax (PAT) to grow 9% to 11%.
For FY18, the group’s PBT and Ebitda registered growth of 8% and 11% respectively, compared with FY17. Its PAT, meanwhile, grew at a rate of 6% versus 7% in FY17.
For 2QFY19, Damansara Realty posted a net profit of RM3.66 million, compared to a net loss of RM330,000 a year ago, thanks to lower operating expenses and contributions from its joint-venture development in Central Park, Johor Baru.
This helped the group’s net profit jump by four times to RM5.46 million for 1HFY19, from RM1.41 million for the same period last year, despite revenue slipping 3.61% to RM140.22 million from RM145.47 million previously.
“Moving forward, we have some interesting property projects, but we will be very careful [in view of the soft property market condition]. We will continue to secure more integrated facilities management projects,” said Brian.
“Currently, our tender book stands at RM313 million, up to the second quarter of 2019, with an exciting 26% success rate. This has placed us on a path for sustained growth and positioned Damansara Realty closer to our financial goals,” he added.
The group is looking to launch a commercial development in Tampoi, Johor called Aliff Square 3, with a gross development value (GDV) of RM187 million amid a slowdown in the property market.
“We do not want to contribute to the property glut, so we only embark on property projects when they are viable,” Brian said, adding that for Aliff Square 3, there already is a long list of people who are interested to buy.
The group is also looking to launch the first phase of a mixed development project in Negeri Sembilan by next year. It is partnering with Menteri Besar Negeri Sembilan Incorporated to co-develop the land with a total GDV of RM771 million.
Following the lifting of the moratorium on bauxite mining in March, Brian expects its “treasury chest” — a 512-acre (207.2ha) land in Kuantan with an estimated five million tonnes of bauxite reserves — to start to contribute positively to the group once it commences its mining activity there at year end or early next year.
The bauxite reserves are expected to generate minerals worth RM300 million to RM400 million and the company is looking to recognise annual sales of RM60 million to RM100 million from bauxite mining.
Damansara Realty’s share price rose two sen or 4.76% to close at 44 sen yesterday, for a market capitalisation of RM140.08 million.