Mah Sing achieves 60% sales target for 2011; good outlook
Aug 18, 2011
Mah Sing Group Berhad has racked up RM1.24billion sales as at 30 June 2011, meeting above 60% of its full year sales target of more than RM2billion. Unbilled sales were approximately RM1.9billion; more than 2 times the revenue recognized from the property division in 2010, giving them significant earnings visibility.
Mah Sing’s Group Managing Director cum Group Chief Executive, Tan Sri Dato’ Sri Leong Hoy Kum noted, “Our sales to date has been good, proving that well located properties with good concept and design offered by branded developers will still do well. Property has always been seen as a good hedge against inflation as astute buyers lock in their investments at today’s prices.”
“The remarkable sales achieved and timely execution continued to provide steady cashflows and liquidity, and we shall continue to maintain our performance and improve sales by riding on our strong branding, good concepts and design as well as right products,” he added.
RESULTS The Group recorded strong revenue and net profit of RM727.9 million and RM84.3 million for the first half of 2011. This represents 38% improvement for revenue and 48% improvement for net profit over the corresponding period in the previous year. The current quarter revenue and net profit of RM416.1 million and RM43.1 million represents 44% and 48% improvement respectively over same quarter last year.
Revenue and profit for the quarter is attributable to property development activities carried out in Kuala Lumpur, Klang Valley, Penang Island and Johor Bahru.
Ongoing projects that contributed to revenue and profit include Garden Residence in Cyberjaya, Kinrara Residence in Puchong, Perdana Residence 2 in Selayang, M-Suites in Jalan Ampang, One Legenda and Hijauan Residence in Cheras, Kemuning Residence in Shah Alam and Aman Perdana in Meru - Shah Alam.
Also contributing are commercial projects such as Southgate Commercial Centre in Sungai Besi, StarParc Point in Setapak and industrial projects, i-Parc 1 and i-Parc 3 in Bukit Jelutong as well as i-Parc 2 in Shah Alam. Projects in Penang Island, Residence @ Southbay and Legenda @ Southbay and in Johor Bahru, Sierra Perdana, Sri Pulai Perdana 2 and Austin Perdana also contributed to revenue and profit. The Plastics division continued to contribute positively to the Group's performance.
The Group’s first and final gross dividend per share of 7.6sen for FY2010 will go ex-date on 13 September 2011 and payable on 28 September 2011.
LOW NET GEARING 0.21TIMES, CASH PILE OF RM803MILLION PROVIDES RM1BILLION WARCHEST FOR MORE LAND ACQUISITIONS AND JOINT VENTURES Mah Sing’s healthy balance sheet and low net gearing of 0.21 times as at 30 June 2011 coupled with its cash pile of approximately RM803million gives it a warchest exceeding RM1billion which will allow it to continue acquiring prime land or joint ventures for its aggressive expansion strategy. The Group is keen on both privately held land as well as Government lands that will be developed by the private sector.
Currently the Group has a total of 35 projects in Greater KL (Kuala Lumpur and Klang Valley), Penang island and Johor Bahru which provides the Group with flexibility to time new launches and new releases according to market trends and demand.
PROSPECTS FOR THE CURRENT FINANCIAL YEAR The maiden launch of Icon City, Petaling Jaya in July 2011 was a huge success, with record sales of more than RM420 million. Incorporating 3 green standards, namely Malaysia’s Green Building Index, Singapore’s Green Mark and the US’s stringent LEED in its various components, the Icon City, Petaling Jaya is expected to generate RM3.2 billion in Gross Development Value (GDV). The overwhelming take-up at this recent launch further confirmed the view that demand remains firm for well-located properties with good concept and design offered by branded developers.
The Group also achieved a new milestone in its landbanking with the recently announced joint development of M Sentral, Jalan Tun Razak. Strategically located at the former Pekeliling flats area, this joint development presents an opportunity for the Group to participate in one of the largest privatized urban regeneration project in Kuala Lumpur.
With strong balance sheets and established branding, the Group is well positioned to seize opportunities arising for quality land acquisition or to enter into joint venture to further build on its earnings base for sustainable long term growth.
The Group’s fast turnaround business model and execution track record have made it the most efficient developer amongst industry peers in terms of asset utilization, with asset turnover ratio consistently above 45% for the last 5 years.
With unbilled locked in sales and remaining GDV estimated at more than RM14.5 billion to last the Group 5 to 7 years, the Group is confident of strong performance for the immediate year and beyond.
PROPERTY INDUSTRY OUTLOOK
The Group sees continued demand for niche landed residential properties in good locations, especially in gated and guarded schemes. Demand is also moving towards mass housing i.e well located townships offering properties within the RM500,000 range.
For the commercial segment, smaller Small Office Home Office (SoHo) and Small Office Versatile Office (SoVo) properties should continue to be popular due to the affordable price points and lack of such supply in selected locations. The Group also finds well sited semi-detached factories which has multiple uses (corporate office, warehousing and light manufacturing) to be in demand due to the relatively low supply.
Currently, property demand is buoyed by favourable employment conditions, good housing affordability due to a conducive financing environment and high savings rate. In the long run, other key drivers that will continue to sustain and drive this sector will be our young population base, new household formation and steady economic growth. High impact projects like the MRT and Greater Kuala Lumpur will also drive property demand moving forward.
