Mah Sing's 3Q net profit falls as buyers adopted cautious stance pre-Budget 2019

KUALA LUMPUR (Nov 16): Mah Sing Group Bhd's net profit fell 30.4% to RM64.23 million in the third quarter ended Sept 30, 2018 (3QFY18) from RM92.31 million a year ago.

Quarterly revenue was also down 28.4% to RM504.26 million from RM704.26 million in 3QFY17.

For the cumulative nine months (9MFY18), the group posted a 24.7% decline in net profit to RM205.57 million from RM273.12 million a year ago, while revenue dropped 22.1% to RM2.15 billion from RM2.2 billion in 9MFY17.

"The months prior to the Budget 2019 announcement was a period of uncertainty, with many buyers adopting a wait-and-see stance for purchase of big-ticket items like properties," said Mah Sing in a statement today.

"With uncertainties removed and Budget 2019 shedding some light for the property market with various incentives, Mah Sing looks forward to buyers returning to the market in a bigger way, especially for well-priced products in good locations," it added.

The group achieved property sales of RM1.22 billion for 9MFY18, slightly lower than the RM1.26 billion recorded a year ago.

Mah Sing said the sales for 9MFY18 were mainly secured from new launches in 2018 which were mainly priced below RM700,000.

The development projects which primarily contributed to the group's results include Southville City in KL South, Lakeville Residence in Jalan Kuching, D'sara Sentral in Sungai Buloh, M Residence and M Residence 2 in Rawang, M City in Jalan Ampang in Greater KL and Klang Valley, Ferringhi Residence in Penang, The Meridin @Medini, Meridin East and Sierra Perdana in Johor, and Sutera Avenue in Sabah.

Other contributions include the group's new Klang Valley projects of M Vertica in Cheras, M Centura in Sentul and M Aruna in Rawang.

"We are evaluating lands in good locations which [have] good accessibility and amenities, where we can roll out products that are in line with market demand for affordably priced homes to fully capitalise on the incentives implemented by the government," said Mah Sing group managing director Tan Sri Leong Hoy Kum in the statement.

He said the group has identified parcels of lands in Greater Kuala Lumpur which may fit into its business model.

"At this juncture, the group is conducting various stages of exploration and negotiations with land owners/vendors, as such initiative is in line with the group's plan to increase its Greater Kuala Lumpur portfolio within the next two to three years," he said.

On prospects, Mah Sing said with 74% of targeted residential sales for 2018 priced below RM500,000, it believes the group stands to benefit from various initiatives of Budget 2019.

These include the continuation of stamp duty exemption on memorandum of transfer (MOT) and loan agreement for first residential property worth not more than RM500,000, as well as the National Home Ownership Campaign which exempts stamp duty on MOT for residential properties priced between RM300,001 and RM1 million starting from Jan 1, 2019.

"The group has also launched its home ownership campaign where home buyers can enjoy Budget 2019’s stamp duty incentives immediately from Nov 15," it added.

Mah Sing shares closed up 3 sen or 3% at RM1.03 today, with 580,800 shares done, for a market capitalisation of RM2.5 billion. —

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