Kuala Lumpur, 2017 – Mah Sing Group Berhad (Mah Sing) focuses on buying more lands in Klang Valley with plans to develop affordable, well-planned mass market housing projects priced below RM500,000.
Since 2015, the Group’s strategy was targeted at affordable pricing. For 2017, it is in the Group’s key plan to build upcoming and ongoing projects at affordable pricing points. Supported by a strong balance sheet with low net gearing of 0.02 times as at 31 March 2017, the Group plans to continue its active land acquisitions and increase its Klang Valley land banks from the current 65% to 75% within the next 2 to 3 years.
During Mah Sing’s 25th Annual General Meeting (AGM), the shareholders approved a number of resolutions, with the key resolution of the first and final single-tier dividend of 6.5sen per ordinary share of RM0.50 each in respect of the financial year ended 31 December 2016, which translates to an attractive dividend yield of approximately 4.5% (according to closing share price as at 31 December 2016).
The Group also briefed its shareholders on the global and domestic key themes in 2017 which include geopolitical uncertainties, foreign policy uncertainties and inflationary pressure in Malaysia. Domestically, the mortgage approval over mortgage application ratio was lower in 2016 compared to 2015 and residential transactions volume was also lower in 2016 (203,064 units) compared to 2015 (235,967 units).
On a positive note, according to Malaysian Institute of Economic Research (MIER), the nation’s sentiments while weak, shows an improving trend. Furthermore, the Ringgit and commodity prices have stabilised in recent months.
With all the above mentioned factors, the property market is currently undergoing consolidation. However, the mid and long-term outlook is still positive due to strong fundamentals such as resilient GDP growth which is expected to have a growth rate of 4.3% to 4.8%, stable labour market and the continued development of public infrastructure. The mid to long term positive outlook is also supported by the demand-supply gap whereby there are 118,000 new household formed compared to 85,000 new houses completed in year 2012 to 2014.
Strong Financial Track Record; Pays Out Minimum 40% Of Net Profit Since 2006
The Group also updated shareholders on its strong financial track record where the Group saw 14% return on equity and 49% asset turnover over a 5-year average, compared to peer average of 9% and 24% respectively. Furthermore, the Group has a strong balance sheet with low net gearing of 0.02 times as at 31 March 2017 which will allow the Group to drive its key strategy in replenishing land banks especially in the Klang Valley area.
2017 also marks the 11th consecutive year for the Group to pay a minimum 40% of net profit as dividend. The strong performance attracted reputable local institutional (41%) and foreign institutional (16%) shareholders, while founder, Tan Sri Dato’ Sri Leong Hoy Kum still maintains the biggest portion of shares (35%).
Mid Range Housing Still Drives Overall Property Demand In Klang Valley
Mah Sing’s Group Managing Director, Tan Sri Dato’ Sri Leong shared a report from National Property Information Centre (NAPIC) in 2016 which stated that the value of property transactions in the Klang Valley was RM30.81billion, accounting for nearly half of the RM65.6billion achieved in the whole of Malaysia.
REHDA’s Home Buyer survey in 2017 reported that 73% of home buyers prefer to buy homes at a price range of RM300,000 to RM750,000. HSBC’s housing survey also showed that 94% of millennials Malaysians intend to buy a house in the next 5 years.
Tan Sri Dato’ Sri Leong said, “We believe the demand for properties will continue to be strong in Klang Valley (Kuala Lumpur and Selangor) as the value and volume of property transactions in the area is by far the highest in the country in terms of economic dominance.”
Growing Land Bank – Two Land Acquisitions In 1h2017
Thus far in 2017, the Group acquired 2 lands in the Klang Valley. The Group acquired a 8.5-acre land in Sentul which is situated right next to Kuala Lumpur with easy access via trunk roads and highways as well as near to Sentul Timur and Sentul LRT Stations. It also acquired a 3.56-acre land which fronts the Titiwangsa Lake Garden, only 250 meters from the upcoming Hospital KL MRT station, close to Istana Budaya, and 1.8km away from the Titiwangsa LRT, monorail and MRT interchange.
The newly acquired freehold lands has a combined potential gross development value (GDV) of approximately RM1.95billion. Mah Sing’s remaining prime land banks currently stands at 2,255 acres, with total remaining GDV and unbilled sales of RM31.5billion.
Developing Properties With Affordable Pricing Points
The Group will continue to develop properties at affordable pricing points with a key focus area in Klang Valley. Tan Sri Dato’ Sri Leong said, “In line with our tagline ‘Reinvent Spaces. Enhance Life’ we believe that enhancing lives come from helping our buyers own their dream properties. As such, we want to focus on building homes at affordable pricing points. In fact, 33% of our 2017 residential sales target price points are below RM500,000, 73% below RM700,000 and 95% below RM1million.”
Mah Sing’s plan for affordably priced developments is also very relevant to its customers as 70% of the Group’s buyers are below the age of 40 years old. A large portion of the group are first-time home buyers or upgraders who are also looking to buy affordably priced homes.
Focusing its development in Klang Valley, the 8.5 acres of land in Sentul will be developed into M Centura, residential suites indicatively priced from RM326,000. The freehold development with an estimated GDV of RM1.3billion is slated to have indicative built ups of 650sq ft, 850sq ft and 1,000sq ft.
For the newly acquired Titiwangsa land, the Group plans to develop a transit oriented development with an estimated GDV up to RM650million. The lakeside condominium will feature residential units from indicative built up of 850sq ft with indicative starting price of RM485,000.
In regards to the acquisition of the land in Titiwangsa, Mah Sing Properties received a letter dated 26 May 2017 from Messrs. Abdullah Chan & Co., Advocates & Solicitors, that there is a competing claim to the rightful ownership of the land, of which the Group and its legal counsel are in the course of verifying. A further announcement will be made in due course, where applicable.
Focus On Affordability In 2h2017; Total Projects Launches In 2017 To Have Estimated Gdv Of Rm1.9billion
The Group also updated shareholders on its focus on affordability and the upcoming project launches in 2H2017. In 2017, the total project launches by Mah Sing is have an estimated GDV of RM1.9billion.
RM700,000 and below
- 565 units of 2-storey link homes in new Rawang township, scheduled to launch in Q3 2017
- 197 units of serviced apartments (OLO Residence) in D’sara Sentral, Sungai Buloh, scheduled to launch in Q3 2017.
RM500,000 and below
- 237 units of serviced apartments in M Horizon@Southbay City, tentatively scheduled for launch in September 2017.
- 90 units of 2-storey link home (Dandelion) in Meridin East, Pasir Gudang, scheduled to launch on 8 July 2017.
- 394 units of 2-storey link home (Fern) in Meridin East, Pasir Gudang, scheduled to launch on 8 July 2017.
- 294 units of serviced apartments (new tower) of Caspian@Meridin Bayvue, scheduled to launch in end July 2017.