This article first appeared in The Edge Malaysia Weekly on April 8, 2019 - April 14, 2019

NOT many companies can claim to provide building maintenance support services for Malaysia’s royal palaces.

Those familiar with the industry say that Widad Group Bhd is the integrated facility management (IFM) firm best known for undertaking such jobs.

“It’s a very unique business. We have done some IFM jobs for sultans from various states. We need to work very hard and deliver great services,” managing director Datuk Dr Mohd Rizal Mohd Jaafar says in his first interview with The Edge following the completion of Widad’s reverse takeover (RTO) of industrial labels manufacturer Ideal Jacobs (M) Corp Bhd.

“Our people are on the ground 24/7,” the 44-year-old declares, pointing to daily routine inspections, ad-hoc maintenance and upgrading works, as well as the maintenance of cleanliness.

With the support of its in-house specialists, strategic partners, consultants, purchasing team, suppliers and sub-contractors, Widad is able to provide total solutions to its IFM clients, and in a timely fashion.

“We have to respond to the clients’ requests within a certain time frame, depending on the priority and sensitivity. When the VIPs are coming, we have to make sure that everything is in order,” says Rizal.

Last July, Tan Sri Muhammad Ikmal Opat Abdullah, via his flagship company Widad Business Group Sdn Bhd (WBG), emerged as a major shareholder in Ideal Jacobs with a 72.62% stake. Consequently, Andrew Conrad Jacobs and Datuk Meng Bin — the then executive chairman and managing director respectively of Ideal Jacobs — ceased to be indirect substantial shareholders.

In the RM520 million RTO deal, Ideal Jacobs acquired Widad Builders Sdn Bhd from WBG to enable the company’s diversification into IFM and construction.

Widad generated a net profit of RM19.3 million on revenue of RM283.4 million in the financial year ended Dec 31, 2018, with the construction division accounting for 65.2% of total revenue. But for a one-off RTO expense charge of RM7.1 million in its consolidated statement of profit or loss and other comprehensive income, the group would have recorded a profit before tax of RM35.6 million.

“Our group’s performance is quite stable. Although there is a slowdown in the construction sector, we still have the higher-margin IFM business, which provides recurring income, to cushion the performance of our construction division,” Rizal explains.

Suffice it to say that Widad is highly profitable for an ACE Market-listed company. Not surprisingly, it is seeking a transfer to the Main Market by 2020.

“For our bottom line, we are targeting a growth of at least 10% every year. Our job is simple — we need to replenish our order book by at least RM500 million a year. Our outstanding order book is about RM1 billion, which should keep us busy until 2022/23,” says Rizal.

Despite the challenging business environment, he remains optimistic given Widad’s ongoing projects and potential to clinch new contracts from its RM5 billion of target submissions this year.

To date, the group has participated in tenders from the public and private sectors worth close to RM1 billion, half of which are from the construction sector and the other half from two potential IFM projects, Rizal reveals. “Based on our financial strength and track record, we are confident of securing at least one IFM job. There are not many IFM players in Malaysia,” he says, adding that new jobs could come “possibly from universities and hotels”.

In 2015, he joined WBG as group CEO and is currently responsible for strategic and day-to-day business direction and performance.

At present, Widad has two major IFM contracts — Istana Negara (National Palace) in Jalan Duta, Kuala Lumpur, and Johor Baru Sentral. The five-year JB Sentral contract, worth RM200 million, expired last year but was extended until end-March this year.

Rizal says Widad has submitted a tender for a contract extension of two to three years, and is now awaiting the bidding results, which should be announced “very soon”.

However, he would not reveal the contract value of the National Palace IFM job, only saying that Widad had secured a three-year contract in 2012 that ran until 2015 and that it was extended for another seven years to 2022.

“Beyond 2022, it really depends on our performance. Yes, the contract is renewable but it is not automatic. We will have to go through another round of tenders — that’s how it works.

“Istana Negara monitors our performance very closely. There are certain KPIs (key performance indicators) and we have achieved 98% to 99% [of them]. We performed excellently in the first three years. That’s why we received the seven-year contract extension.”

Previously, Widad only focused on pure construction and IFM jobs. But now, the group hopes to do both concurrently as a “key strength”, since the segments have synergies that can be achieved.

Rizal says Widad can construct a facility and then manage it for its clients. “With this business model, we can address the cyclical nature of the construction sector. Hopefully, we can secure at least one sizeable job this year.”

In addition, Widad is eyeing rail-related construction projects and the asset management business.

“We are exploring opportunities in the construction of rail assets as the government is relooking at focusing on the rail sector, such as LRT3 (Light Rail Transit Line 3) and ECRL (East Coast Rail Link). We are looking at establishing a rail division and actively engaging with experts in this segment,” says Rizal.

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