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Wednesday, 1 March 2017

(The Edge) Cash-rich Mah Sing eyes land-bank expansion

Its focus is mainly in Greater Kuala Lumpur, says group MD

KUALA LUMPUR: Mah Sing Group Bhd intends to leverage the group’s healthy balance sheet to pursue new, strategically located land banks.

“Our cash pile and low net gearing allow us to look out for potential land acquisitions, joint ventures and investments. Our focus is mainly in Greater Kuala Lumpur, but we are also open to other high growth locations in Malaysia,” said Mah Sing group managing director (MD) Tan Sri Leong Hoy Kum in a statement yesterday.

The group currently has a cash pile of RM923.8 million with a low net gearing ratio of 0.02 times.

This year, the group noted, will see the expected final stage billings on delivery of vacant possession of properties amounting to about RM607 million, which will further enhance the group’s cash position.

For the financial year ended Dec 31, 2016 (FY16), its property development division’s operating profit grew 2.6% to RM469.9 million, mainly on lower selling, marketing and administrative expenses.

Revenue, however, slid 6.6%, mainly due to lower contributions from M City in Jalan Ampang and Icon City in Petaling Jaya, which were at the tail end of development during the financial year under review.

Mah Sing said it achieved approximately RM1.78 billion sales in FY16 by offering products in line with market demand — beginner homes for the mass market and upgrader homes in selected locations.

It said moving forward, it plans to focus on building more accessibly priced homes. “As we enter into the new financial year, we will continue to adopt a strategic approach and phase our launches. The focus will be on accessible homes, with 73% of our residential sales target price point at RM700,000 and below,” said Leong.

Mah Sing is anticipating the property market to improve in the second half of 2017, and expects demand for affordable housing to pick up as buyers become more realistic about their expectations and continue to view property as the preferred asset class for wealth preservation in Malaysia.

“The government’s commitment to improving the infrastructure of the nation such as the MRT (mass rail transit), LRT (light rail transit) extensions and HSR (high-speed rail) will have [a] multiplier effect on the economy and further improve access to developments, thus creating new demand,” it said.

The group’s profit for FY16 was RM361.36 million, which is 6.5% lower from RM386.68 million a year ago. Revenue slid 4.9% to RM2.96 billion from RM3.11 billion. It proposed a final dividend of 6.5 sen per share, the same quantum as the year before.

The group’s net profit for the final quarter ended Dec 31, 2016, came in at RM85.61 million, down 24% from RM112.89 million a year ago, mainly due to a slight dip in property development revenue as the M City and Icon City projects were nearing completion. Quarterly revenue was down 4% at RM742.18 million from RM773.14 million.