Edge Prop, Photo Credit to The Edge
clock 24-01-2018
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Mah Sing Eyes Minimum Sales of RM1.8b in 2018

Mah Sing Group Bhd is expecting to turn in sales of at least RM1.8 billion this year by launching more products priced below RM500,000, having breached the mark last year.

The property developer also said it is now in a good position for more land banking, joint ventures and investments, given it has returned to its net cash position.

Compared with a net gearing of 0.04 times and 0.02 times in 2015 and 2016, Mah Sing has cash and bank balances amounting to RM1.26 billion as at Sept 30, 2017.

"With our strong balance sheet, we will definitely continue to scout for more land, focusing more in the Klang Valley and Greater Kuala Lumpur" group managing director Tan Sri Leong Hoy Kum told reporters on the sidelines of Invest Malaysia 2018.

The group's focus on the Klang Valley can be seen in terms of a targeted increase in terms of gross development value in the region to 75%, from 66% now, within the next two to three years, he said.

"We will not buy the land for the sake of buying, but we are buying for the demand" Leong said, adding young home buyers, especially those currently residing in other states, are key to Mah Sing's target market.

Leong debunked talks of the overhang in the property market, saying it is due to the mismatch in terms of location and pricing. Demand is expected to persist, as long as products are strategically located and priced, further supported by strong economic figures, higher oil prices, and the strengthening ringgit, he added.

This is evident at its M Centura in Sentul, Fern in Johor, and M Vista in Penang, which recorded a take up rate of more than 95% over a weekend of preview.

However, Mah Sing's focus on the affordable housing market means prudent cost management must be in place,its executive director Datuk Steven Ng said.

One cost-effective measure the group has taken is to apply value engineering in its construction processes, Ng added.

He said the group's pre-tax profit margin of about 20% has been held up, despite a rise in land and material prices.

At present, about 50% of its construction processes adopt the industrialised building system.

Mah Sing currently has a remaining land bank measuring some 2,131 acres, with gross development value (GDV) and unbilled sales amounting to RM28.3 billion, sustainable for the next eight years.

Of the minimum RM1.8 billion sales target, the majority (74%) is expected to be contributed by residential properties priced RM500,000 and below, 13% from properties ranged between RM500,000 and RM700,000, and another 13% from higher-end properties priced above RM700,000.

Mah Sing's share price closed unchanged at RM1.46 today, for a market capitalisation of RM3.54 billion. - theedgemarkets.com

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