KUALA LUMPUR, 12 April: Mah Sing Group Berhad (Mah Sing) today noted that the worst may be over for the Malaysia property market as various indicators appears to have bottomed out. The company is confident of achieving its RM2.3billion sales target, and will continue to maintain a strong balance sheet for land acquisitions and to counter uncertainties, during its media briefing at the 12th Invest Malaysia 2016 (IMKL) here.
In attendance were Mah Sing’s Group Managing Director, Tan Sri Dato’ Sri Leong Hoy Kum as well as Chief Executive Officer, Mr. Ng Chai Yong and Executive Director, Group Corporate and Investment, Dato’ Steven Ng Poh Seng, sharing its Group strategy, financial updates, recent and upcoming launches as well as the outlook of the property industry.
Malaysia’s Property Industry – Reaching A Turning Point
After a bumpy 2015, interest in the property industry has returned amongst local and foreign institutional investors. Tan Sri Dato’ Sri Leong commented, “The various macro prudential measures introduced in recent years have worked to reduce the growth pace of household debts and moderated house price growth. The quality of housing loans in Malaysia is healthy and at only 1.6% gross impaired loans, the Malaysian banking sectors still compares favorably against regional peers like Thailand (2.9%), Indonesia (2.5%) and Philippines (2.2%).”
Various indicators point towards the Malaysian property market reaching a turning point soon; contraction of residential property transactions have bottomed, with a slower contraction in Q4 2015 compared to Q3 and Q2 2015. Consumer sentiments may have reached the bottom, with the MIER consumer sentiment index at an all-time low of 63.8 points in Q4 2015, even though the business conditions index showed a slight improvement in the same quarter. House prices are unlikely to contract, and is likely to grow at low-mid single digit levels; during the Global Financial Crisis, house prices continued to grow at low single digit levels.
Tan Sri Dato’ Sri Leong noted, “We expect the property market to pick up in the second half of 2016 as market sentiments have bottomed. Mah Sing is targeting the right segment, and several of our projects can tap into the MyDeposit scheme. Some of our projects below RM500,000 include Cerrado serviced apartments in Southville City@KL South indicatively priced from RM368,000 and Cendana apartments in M Residence 2, Rawang priced at RM170,000 in the Central region. In the Southern region, there are Meridin Sovo in Meridin @Medini from RM401,000, Meridin Hotel serviced suits from RM460,000, Austin Suites in Austin Perdana from RM455,000, Meridin East (Greenway units from RM356,000 and The Willows from RM387,000).
Mah Sing Sets Sales Target Of RM2.3 Billion For 2016 – Achieved Commendable Sales Of Approximately RM408 Million In Q1 2016
The Group achieved a commendable sales target of RM2.3billion in 2015 and are looking to match that figure for 2016. They achieved approximately RM408million in sales as of 31 March 2016 despite the shorter working Q1 due to the festive season, and are in a good position to hit their 2016 sales target of RM2.3billion with its wide product range located at key hotspots and attractive pricing.
Affordable Products Leading Sales Drive – 81% Take Up For Link Homes In Meridin East Township In Iskandar Malaysia
In March 2016, Mah Sing conducted a soft launch of 246 units of Greenway linkhomes in its Meridin East township in Iskandar Malaysia, with 199 units of 81% take up. Meridin East is Mah Sing’s biggest township and slated for an official launch in 2Q2016. These units have a land size of 18’ x 65’, a built up of 1,595sqft and are priced from RM356,000.
Strategic Yet Diversified Locations
Greater KL and Klang Valley are expected to contribute 69% to sales this year, with Johor expected to contribute 21% followed by Penang at 9% and Sabah at 1% sales. The Group’s planned residential launches in 2016 include:
GREATER KL AND KLANG VALLEY
- Cerrado service apartments in Southville @KL South – affordable luxury homes comprising of 2 and 3 bedrooms with built-ups from 650 square (sq) feet (ft) – 825 sq ft
- D’sara Sentral, Sungai Buloh – launch of 4th block with built-ups from 773 sq ft – 825 sq ft
- Lakeville Residence, Taman Wahyu – launch of 5th block with built-ups from 773 sq ft – 825 sq ft
- Laman Ayu township, Rawang – link homes scheduled for launch in 2016
- Ferringhi Residence 2 in Batu Ferringhi – resort condominiums with a built-up of 1,600 sq ft
ISKANDAR MALAYSIA AND JOHOR BAHRU
- Meridin East township in Pasir Gudang – link homes with built-ups from 1,208 sq ft – 2,910 sq ft
Malaysian Property Market Supported By Strong Fundamentals, Mah Sing To Offer Full Range Of Products At Diversified Locations At An Attractive Price, Targeted At The Right Buyers
In the medium to long term, property demand will continue to be strong supported by a young population demographic, healthy employment and expansion in wages, conducive interest rate, continued GDP growth, urbanisation and improvement in public transportation.
The Group has a wide range of products spread across the property hotspots of Greater KL and Klang Valley, Penang, Johor and Sabah to cater to the different demands of the market. Its 46 projects (11 completed) in these property hotspots comprise of residential projects, industrial projects and commercial projects such as lifestyle shops, retail shops, hotels and SOVOs which complement township developments.
Keeping with its strategy of providing affordable homes to the mass market segment, 89% of the Group’s planned residential launches in 2016 will be priced below RM1million, with 68% priced below RM700,000 and 50% priced below RM500,000.
Prudent Financial Management Strategy – Outstanding Balance Sheet For Growth Opportunities And Landbanking
Mah Sing’s prudent financial management has seen the Group accumulate an outstanding balance sheet, with a cash pile of approximately RM1.4 billion, the highest in the Group’s history. The Group recorded a strong five-year (2010-2015) revenue compound annual growth rate (CAGR) of 23% and profit after tax (PAT) CAGR of 27% as well as a net gearing ratio of 0.04 times to strengthen its liquidity profile further.
To ensure sustainable growth, the Group will continue to accelerate work progress on projects with good take up, which will unlock the liquidity provided by the high RM4.75billion unbilled sales, equivalent of 1.7 times the revenue recognised from the property division in 2015. Furthermore, 2016 will see the expected final stage billings on delivery of vacant possession of properties amounting to approximately RM651million. This will further enhance the Group’s cash position.
The Group will continue to be disciplined in financial management to ensure strong balance sheets and liquidity while being selective on new launches and actively pursue sales from existing projects.
The Group’s remaining landbank worth RM28.1 billion comprises of residential, commercial, industrial and mixed developments, providing viable options for various types of buyers and investors. The combined value of RM32.85 billion can potentially support the Group’s revenue and earnings growth for the next 8 to 9 years.
At the same time, the Group will be on the lookout for good landbank should the right lands with good price and payment terms present themselves. “The lands must also fit our business strategy and allow us to value add,”noted Tan Sri Leong.
Exemplary Dividend Payout Of Minimum 40% For 10 Consecutive Years, Attractive 5% Dividend Yield
For the financial year 2015, the Group has proposed a first and final single-tier dividend of 6.5 sen per ordinary share of RM0.50 each in respect of the financial year ended 31 December 2015, subject to shareholders’ approval in the upcoming Annual General Meeting.
This translates into an attractive dividend yield of approximately 5%. This is also consistent with the Group’s dividend payout policy of a minimum of 40% of net profit since 2006, indicating the strong and consistent financial performance of the Group.
*Image Caption: (L-R) Chief Executive Officer, Mr. Ng Chai Yong, Group Managing Director, Tan Sri Dato’ Sri Leong Hoy Kum, and Executive Director for Corporate & Investment, Dato’ Steven Ng