Information and communications technology (ICT) and property company Digistar Corp Bhd is bullish about the prospects of its newly-launched central monitoring system (CMS) called ‘Panther 911’.
Chief executive officer Datuk Wira Lee Wah Chong says the company targets 100,000 users for its hi-tech product in the first year.
A CMS is security-based system that includes aspects such as CCTV monitoring and alarms.
Digistar’s medium term goal is to secure a subscription base of 500,000 for its CMS in five years.
“The margins are good, about 20% to 30%. And this would be reflected from our current financial year (ending September 30, 2014) onwards,” he tells StarBizWeek.
“The first year may be slower than what we target but once our CMS gains visibility in the market, we expect a jump in take-up rate among business owners and individuals,” Lee says.
Digistar had spent RM5mil over the past two years to develop the CMS.
The company intends to use a multi-level marketing strategy to push the product into the market. “To incentivise the sales staff, they will get monthly a commission of 5% from the subscriptions they secure.”
In addition, the police force is also looking at the installation of closed-circuit television (CCTV) cameras at resorts and islands off Sabah’s east coast.
Last week, the police was reported to have asked Digistar to send them a proposal on installing the ‘Panther 911’ security system in Sabah.
The Inspector-General of Police Tan Sri Khalid Abu Bakar said to have the system linked directly to police stations would help security forces respond faster.
Khalid said the Eastern Sabah Security Command (Esscom) was planning to place security teams at 11 private resorts and islands that were the furthest away from Semporna and Lahad Datu. This was in light of recent killing and kidnapping events highlighted in the news.
If successful in this tie-up with the police, it would be Digistar’s first collaboration with the public sector for its CMS business. Right now, its target is on the mass market and commercial buildings.
Entering the Sabah market would not come as a surprise as Lee has always wanted to expand into Sabah and Sarawak.
That would be the second phase of Digistar’s security system business and the company estimates another RM5mil of investments for the expansion in the next two years. However, Lee notes that there needs to be better Internet connectivity in order for Internet-based surveillance systems to thrive in the country.
Digistar has a few competitors in the local CMS space.
But it seeks to differentiate itself by the attractive features of its system.
Digistar’s Panther 911 CMS system offers 24-hour monitoring services via an internet protocol-based platform. It can switch to run on 3G, 4G and LTE networks during power disruptions.
Banking on property sector
Lee says the company has plans to be among the top 100 companies in Malaysia in terms of market capitalisation in the next five years.
To do that, Lee says the company needs to further expand its property business. For Lee, property is Digistar’s next phase of growth as he opined that the growth trajectory for an ICT company has its boundaries.
“We are still focused on our ICT business but to achieve bigger goals, we will expand our property division,” he says. “We are looking for pockets of land around the Klang Valley now for small scale projects.”
Digistar already has a serviced apartment project in Malacca called The Heritage, with a gross development value of RM150mil. It is already 70% sold and is targeted to be opened this November.
Lee says the company intends to rent out the remaining 30% of apartments for recurring income.
“We plan to rent out like a hotel.
“The project will be a ‘condotel’, a combination of condominium and hotel,” he says.
Digistar is already speaking to hospitality partners to rope in for the management of the hotel component at The Heritage.
The company has also a 15-year concession for the construction and asset management of the Malaysian National Technology Advancement Centre in Alor Gajah, Malacca.
The project is a tie-up with the Works Ministry for the minstry to carry out training programmes for engineers and architects.
Its concession consists of RM174mil for the construction of facilities and infrastructure, and RM66mil for the provision of ICT and lab equipment.
Lee says the margins for this project would likely be in the double-digit range as well.
Digistar is also in talks to develop its telecommunications segment as it owns three individual licenses from the Malaysian Communications and Multimedia Commission to provide network and facilities services for five years.
Lee says discussions are on-going and declined to reveal any details.
All these efforts, says Lee, are aimed at steering the company back into profitability.
For the 2013 financial year (FY13), Digistar made a net loss of RM11mil compared to a profit of RM6mil in FY12.
The company had said that the loss was due to a higher operating cost, commencement of projects where revenue was yet to be recognised as well as the business expansion for its CMS and telecommunications divisions. Lee reckons that Digistar’s CMS as well as other initivatives would help turnaround the company and generate long-term recurring income.