AIR-CONDITIONING contractor D-Team Engineering has had a tough year, even with the gradual pick-up in the construction sector, but its management team said they are exploring new clients and income streams.
In a bold leap across the pond, D-Team entered the Australian student housing market in September, Zheng WenHui, the company's head of office, told The Business Times.
D-Team is also looking beyond its traditional stomping ground - additions and alterations (A&A) and fit-out works at commercial and industrial buildings - to take on projects at community institutions as well.
The company specialises in air-conditioning and mechanical ventilation system installation, and mechanical and electrical system services.
Singapore's construction sector returned to year-on-year growth in the first quarter of this year, after 10 quarters of contraction, according to Ministry of Trade and Industry figures. But Ms Zheng, 36, said that "the so-called pickup is only for the infrastructure works", with little uplift expected from property sector trends such as the redevelopment of private residential collective-sale sites.
Meanwhile, revenue has softened from S$19 million in 2018 and is expected to come in around S$14 million this financial year, as the value of individual contracts shrank, said finance manager Christina Ong, 50.
"In the market now it's slow, so we are getting just enough (projects) to roll over," project director Sunny Wong, 66, told BT, even as he noted that the company remains profitable. "No point in taking too many, when you cannot cope with it later."
He added that, "recently, if you look at the papers, a lot of companies closed down - builders, especially, quite a number of them".
The Business Times reported in October last year that the construction sector risked a spike in business collapses amid a cash crunch, with smaller players in danger of main contractors' distress.
Lawyer Spring Tan also said at the time: "As the pie gets smaller, small construction firms will feel the need to bid lower at tenders, even at or below costs, in order to win the bid."
PICK AND CHOOSE
But Mr Wong emphasised that D-Team is "quite choosy about the jobs that we are tendering for", picking customers with a good track record of payments, such as the public sector.
Minister for National Development Lawrence Wong recently pledged "a healthy pipeline of public sector projects in the coming years" - including hospitals, public transit, and both public and private housing estates - that is expected to support Singapore's built environment industry.
Upgrading works aside, D-Team is also sniffing at the maintenance business: The Biopolis campus that houses the Agency for Science, Technology and Research has been a key client since 2015, with D-Team holding a contract to provide comprehensive service, maintenance and repair of mechanical and electrical systems.
D-Team is an approved vendor for government tenders for certain general building and minor construction jobs, in areas such as electrical components and consultant services.
"We'll see how the market picks up. Of course, the profit margin is now less, because there are fewer jobs and more people fighting for them," Mr Wong noted, citing labour and material costs as challenges too.
As the eight-year-old D-Team grows, it is strategically aiming for recurring income from full-service maintenance packages - for example, air-conditioning, electrical and fire protection systems, all in one - to expand on its base of A&A projects.
On top of that, while annual revenue fell year on year, "at least we have more types of clients, like hospitals, nursing homes", said Ms Zheng.
While D-Team's previous projects have included factories, hotels and malls, it now also counts works at an international school, a hospital ward and an upcoming nursing home as contracts that the firm has clinched.
"I think every estate is going to get a nursing home, because the generations are getting older," Mr Wong said, with the team keen on the opportunity from such community facilities.
Managing director Derek Wu Jin, 49, also noted that the international school will be the first school project for the firm. He named the use of the Daikin gas tight joint - a component that can join refrigerant pipes with a tight seal - as a highlight and "the latest innovation for (the) productivity drive in the construction market".
Meanwhile, D-Team's close relationship with a local developer has even helped the smaller company to make a leap into a new vertical - student housing. The developer gave D-Team a building facilities management deal for a purpose-built student accommodation asset in Brisbane, Australia, which Ms Zheng said took effect in late September this year.
MORE GROWTH OPPORTUNITIES
"Currently we're working very closely with them, the builder. They actually started opening a couple of hostels in Australia and asked us to go in," Mr Wong said of the mechanical and electrical maintenance contract, which began in September. D-Team's management noted that the developer also has student dormitories in Australian cities besides Brisbane - which could make for more growth opportunities.
"In future, we can try to get more projects in terms of hospitals and maybe the student hostels in Australia . . . so at least we can get more revenue from that," Ms Ong added.
But, despite its Australian debut, the company is still cautious on venturing abroad - even with the building boom in neighbouring countries.
"Malaysia, Indonesia, all are shaky," said Mr Wong, referring to political continuity. "I think Singapore still has enough to work on."
Indeed, with D-Team's plans in place, Ms Ong said revenue for the next financial year is expected to improve to S$20 million-S$25 million, especially as the firm has already won 10 projects for the coming year - the same number as in the whole of 2019.
And, looking at the pipeline of upcoming contracts, "we are doing more on the old buildings where they upgrade" and replace air-conditioning equipment, Mr Wong added.
Taking part in the BCA Green Mark Scheme, which certifies environmentally-friendly buildings, has been a priority for D-Team. The scheme, launched in 2005, is halfway to its target of having 80 per cent of Singapore's buildings be "green" by 2030.
He said: "That's a big market at the moment, because with that one, you can really save energy and go green."
Mr Wu added that D-Team's maintenance services may be limited to mechanical and electrical works for now, "but we hope to expand to other trades - such as landscaping, cleaning, security - in the next couple of years".