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Friday, April 24, 2015

Mah Sing's hungry

KUALA LUMPUR: Armed with unbilled sales of RM5.3bil, zero gearing and cash of RM1.4bil, Mah Sing Group Bhd is on the prowl for suitable land bank and joint ventures (JVs) with the Government on the development of its land in the Klang Valley.
Group managing director Tan Sri Leong Hoy Kum said the group had been building up its war chest in preparation of bigger things and was on the lookout for bigger investments, especially in prime areas in the city.
“Cash is king, and it is moments of crisis that we see opportunities. We are ready to take advantage of opportunities,” Leong told StarBiz.
Mah Sing is the biggest non-government-linked developer in terms of sales and market capitalisation on Bursa Malaysia. It had chalked up sales of RM3.34bil last year and its market capitalisation is almost RM4bil.
The prime property parcels belonging to the Government that is likely to be up for sale include a portion of the Tun Razak Exchange (TRX), which is under the troubled 1Malaysia Development Bhd (1MDB).
In a strategic review completed in February this year, 1MDB admitted that its debt-financed capital structure was no longer appropriate and that it needed more direct matching of assets and cashflows.
In this respect, the Finance Ministry-sponsored fund stated that it would sell land development rights and/or enter into profit-sharing JVs with regards to its property projects, namely, TRX and Bandar Malaysia.
1MDB also stated that it was open to such collaboration with other government-linked investment companies, as well as with Malaysian and international private-sector developers.
1MDB, with debts of RM42bil, has been saddled with cashflow problems and has looked into the option of selling its energy unit and large tracts of land in Penang and Port Klang.
When asked whether Mah Sing would be ready to participate in Government projects, Leong declined to comment.
However, he said the group had been building up its war chest to prepare to take on large projects and was on the lookout for bigger investments.
“An unbilled sales of RM5.3bil is twice our revenue. This will be more than enough to comfortably sustain our capital requirements for all our existing projects while at the same time expanding,” said Leong.
Mah Sing executive director Datuk Steven Ng Poh Seng added that the house price index had now dropped to single-digit growth rates as of 2014. It was 11.8% in 2012, and had slowed to 7% as of 2014.
“This shows that the cooling measures by the Government have worked. Despite this, Mah Sing’s sales have been growing every year. This shows that the underlying demand for property is strong. It is very unlikely that property prices will come down,” said Ng.
Leong said the key to selling its property was pricing and location. Some 75% of Mah Sing’s exposure is in the Klang Valley, while 15% is in Johor.
Ng added that some 70% of the population was below the age of 39 and only 2% of buyers were foreigners. Furthermore, house owners who owned more than one property made up 3% of total property buyers.
Mah Sing recorded sales of RM3.43bil in 2014, and is looking to replicate this target this year.
The group had achieved sales of RM761mil as of April 22. Mah Sing presently has a total gross development value of RM49bil to last it over the next eight to 10 years.

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