Mah Sing Group Berhad (Mah Sing) has recorded profit before tax of RM65.6million on the back of revenue of RM669.8million in the first half of the financial year ended June 30, 2020. It also achieved property sales of approximately RM418.6million for the period, with an additional RM1.6billion sales bookings on hand.
Balance sheet remained healthy with cash and bank balances of approximately RM1.13billion as at June 30, putting the Group in a good position to continue focusing on increasing land banks in the Klang Valley, and exploring new business opportunities.
The Group also continues to reward shareholders with a minimum of 40 percent net profit as dividends for the 14th consecutive year since 2006. The dividend of 3.35sen per ordinary share in respect of the financial year ended Dec 31, 2019 shall be paid on Sept 29.
Mah Sing’s Founder and Group Managing Director, Leong Hoy Kum said, “The Movement Control Order (MCO) and Conditional Movement Control Order (CMCO) period has generally been challenging for all developers, as site progress of all projects were halted during MCO and there were also delays in loan approvals for sales conversions.”
While the market has been relatively quiet, Mah Sing has bucked the trend launching M Luna in Kepong in June 2020 and M Adora in Wangsa Melawati in July 2020 after increased digitisation efforts to reach out to buyers. This proved to be a good decision as both launches achieved 90 percent take up for the maiden phase during their respective weekend launches.
“At present, we are focused on converting our RM1.6billion in sales bookings, clearing the existing stocks and to catch up with the construction progress of our projects. Recently, we have successfully delivered vacant possession of towers C and D of our Lakeville Residence at Taman Wahyu and tower A and B of our Cerrado at Southville City @ KL South, Bangi,” Leong elaborated.
The Group is revising their 2020 sales target to RM1.1billion from RM1.6billion previously in view of a longer period required to convert existing bookings to sales. Although there was a jump in mortgage loan applications in June, the approval rate deteriorated to 24.6 percent compared to 32.6 percent in May 2020. This was primarily due to banks becoming more stringent in approving loans amid weak macroeconomic indicators.
For the remainder of 2020, the Group is planning to launch more projects in the affordable segment at strategic locations including Carya in M Aruna, Rawang, remaining blocks of M Vertica in Cheras and Ferringhi Residences 2 in Penang as well as Acacia, Jasmine 1 & 3 link homes in Meridin East, Johor Bahru.
For the six-month period ended June 30, the Group posted profit before tax of RM65.6million on the back of revenue of RM669.8million. On a quarterly basis, the Group recorded profit before tax of RM22.4million and revenue of RM298.6million.
On the property development front, revenue was RM510.8million, whilst operating profit was RM75million for the six-month period ended June 30. The development projects, which contributed mainly to the Group’s results, include M Vertica in Cheras, M Centura in Sentul, Southville City in KL South, Meridin East in Johor and Lakeville Residence in Jalan Kuching. Other projects, which also contributed, include M Oscar in Off Kuchai Lama, M Aruna in Rawang, Ferringhi Residence and Southbay City in Penang, Sierra Perdana, Meridin @ Medini and Mah Sing i-Parc in Johor.
The plastics segment recorded revenue of RM132.3million in the current period and is exploring new expansion opportunities in healthcare related products.
With disciplined financial management and a healthy balance sheet with cash and bank balances at approximately RM1.13billion as at June 30, Mah Sing continues to focus on increasing land banks in Klang Valley with key focus in the affordable segment.
“Echoing our strategy of fast execution and financial prudence, we have successfully launched all three lands that we bought in 2019. As a market driven developer, we are always on the lookout for prime lands to continue to rollout products that are in line with the market demand. At the same time, we also have remaining landbank of 2,005 acres with remaining gross development value and unbilled sales totalling approximately RM24.64billion as of 30 June 2020, which can provide earnings visibility for at least 8 years,” Leong said.
There are 13 research houses that cover Mah Sing currently, with nine buy calls and three neutral calls. UOB Hay Kian in its Aug 19 Company report maintained BUY recommendation on Mah Sing with Target Price of RM0.80, noting that Mah Sing is the biggest beneficiary of the reintroduction of HOC. Additionally, RHB Investment Bank in its 5th August Company report has also maintained their BUY recommendation with Target price of RM0.91 for Mah Sing. RHB Investment pointed out that the Group’s timely property launches are riding on the demand recovery.