Mah Sing Group Bhd managing director and chief executive Tan Sri Leong Hoy Kum believes that the group’s efforts to improve its performance over the previous financial year are bearing fruit. Its sales target of more than RM2 billion in 2011 (versus 2010’s sales of RM1.5billion) was already at the 60% mark at end-1H2011, with sales at RM1.24 billion.
The launch of its flagship commercial project, Icon City, in July registered good take-up rates, says Leong, attributing the encouraging response to the efforts of the group’s business development team, its effective marketing strategies, premium branding and the location of its developments.
“We are committed to providing value for buyers,” he says, adding that Mah Sing’s strong brand, track record and ability to deliver innovative and quality products are factors prospective buyers should consider when deciding on a property purchase. In an interview with The Edge, Leong talks about the projects that are keeping the group busy this year and in the immediate term, the building of a brand and the importance of teamwork.
The Edge: Describe the company’s performance this financial year. How has the take-up for the new and existing launches been?
Tan Sri Leong Hoy Kum: The launch of Icon City, our flagship commercial project, in July was well received … over the weekend of its launch, we were able to register sales of RM426.5 million from the commercial i-SoVo (small office versatile office) units, 30 Jewels (7 and 8-storey shopoffices) and Gourmet Street (1 and 2-storey retail shops). We were able to enjoy an 80% take-up rate for i-SoVo and 97% for 30 Jewels.
Our M City, Jalan Ampang, also saw favourable response during its weekend preview, with a 98% take-up rate. As for our landed properties, we were able to generate a strong take-up of close to 75% for [email protected] Residence, while for [email protected] Residence, there was confirmed interest in 32 units, valued at RM47.4 million.
Our commercial property Star [email protected]’sara, Sungai Buloh, was also able to generate overwhelming response during the weekend launches for different products. The 92 units of 3-storey shopoffices valued at RM242.5 million and 78 units of retail lots at RM71.7 million launched on different weekends were all snapped up.
How does 2011 compare with 2010 in terms of financial performance and sales? Has it, in general, been a good year?
So far, our 2011 results and sales have far surpassed 2010’s records. We have set a sales record of more than RM2 billion for 2011 versus 2010’s sales of RM1.5 billion. As at June 30, we achieved RM1.24 billion in sales, more than 60% of our sales target.
In terms of financial performance, we recorded strong revenue and net profit of RM727.9 million and RM84.3 million respec tively for 1H2011, representing a 38% y-o-y improvement for revenue and 48% improvement for net profit. Unbilled sales were about RM1.9 billion — more than double the revenue recognised by the property division in 2010, giving us significant earnings visibility.
Describe the mood in the local property market. To what extent has the uncertainty in the global financial markets impacted the local property market?
Property has always been seen as a good hedge against inflation, and in the long term, our young population base, new household formation and high saving rates will continue to drive demand for properties. Demand has so far been domestic-driven, and for Mah Sing, most of our buyers are locals who are buying for their own use and investment [not speculation].
What are your priorities for the rest of the year and 2012?
We want to continue reaping good sales from the projects that have been launched thus far, and also to launch new projects that have attracted a healthy number of registrants. We will also focus on our landbanking efforts.
What are some of the projects/developments that will keep you busy over the next 12 months?
Icon City, being our flagship commercial project with a GDV of RM3.2 billion, will definitely keep us busy as the development is to be completed within seven to eight years. For the next 12 months, we will concentrate on Phase 1 of the development comprising i-SoVo, 30 Jewels, Gourmet Street, serviced residences and boutique offices.
Garden Plaza (GDV: RM384 million), our first commercial project in Cyberjaya, is expected to contribute to the future performance of the group. We are also looking forward to our M Sentral project (estimated GDV: RM900 million), which is part of the largest privatised urban regeneration project in Kuala Lumpur. Our niche and high-rise project in Mont’Kiara, namely Icon Residence, Mont Kiara, with a GDV of RM408 million will also keep us occupied. This strategically located project, which is just next to the upcoming Matrade Centre, will offer a resort-living lifestyle and be Green Building Index (GBI) and Green Mark compliant.
We are looking forward to our future developments in Penang, such as the Icon Residence, Ferringhi Residence and the preview of Southbay Plaza with a total estimated GDV of RM3.2 billion. We are also excited about the first i-Parc series to be introduced in Johor Baru, with the expected launch of Mah Sing i-Parc. We see enormous potential for it to be a centralised logistics hub as it is only 1km from the Port of Tanjung Pelepas and 23km from Jurong Industrial Estate in Singapore.
Given how crowded the marketplace is today, what sets your brand apart?
We normally acquire land in strategic locations with ready basic infrastructure and amenities nearby. We also consider accessibility. These [parcels of] lands fit our fast turnaround business model, where we launch not too long after we acquire the land, thus capturing current market demand and trends. Every project we develop begins with a concept that we feel is suited to the location and meets market needs. A research team conducts an in-depth market study that allows us to identify and set new trends.
We do not merely build homes, but also communities … we organise various activities to foster relationships between neighbours. As a developer, we strongly believe in good after-sales service, and our customer service team is the first point of contact for the buyers to give us their feedback.
We also have a strong quality control and quality assurance team that ensures all our projects meet and exceed the stringent quality standards. We also adopt international best practices in ensuring quality, and have sought Conquas (Construction Quality Assessment System) certification by the Building and Construction Authority of Singapore for all new residential projects.
In a nutshell, what does the company brand stand for? How do you strategise to ensure that the brand values are maintained and upheld throughout the many developments?
We pride ourselves on being a premier lifestyle developer, and want to maintain that image for years to come. The overwhelming response we received during our previews and launches implies that buyers are confident with what our brand is capable of offering — the ability to conceptualise, design and deliver quality products with unique concepts on a timely basis in good locations and offer commendable after-sales service.
Awards and certifications serve to recognise our efforts, help in our branding and encourage us to perform better. Our corporate, project and branding strategies have always revolved around protecting and enhancing value for our shareholders and customers.
Over the years, the company has grown from building small projects to lifestyle and upmarket projects, and then commercial and high-rise developments. How do you manage this growth? How do you manage the successes without compromising on standards?
It has not been an easy process but we were able to do it with our strong teamwork. The business development team looks for prime land in good locations, the product development and project planning team conceptualises and fine-tunes the products and the marketing team reaches out to customers. After that, the delivery process starts and that is where our project implementation, contracts, quality assurance and other support teams come in. We are also fortunate to have good business partners and contractors who are able to help us deliver our vision.
Describe what it takes to build this team, and more importantly, motivate them. To what extent is trust important?
I believe in recruiting and retaining the right talent for the job and communicating the overall company vision and targets clearly to them. When they understand and believe in the goal and management’s commitment, you can see the staff going the extra mile to deliver. Our performance management system is KPI-based, and our people know that when they — their team and the company — perform well, they shall be duly rewarded.
Trust is important, and reciprocal. I engage my employees in developing plans to move the company forward. We practise an open-door policy and encourage feedback and constructive comments.
How important are green building technologies and sustainability to the company?
Quality and sustainability are the cornerstones of our project delivery and today, green building is also high on our list of priorities. One project that incorporates the green concept is our Icon City in PJ. It is designed with sustainability in mind and incorporates three green standards — GBI, Green Mark and LEED — in its various components. It is poised to be the ultimate green development in Petaling Jaya.
How is the project in Penang faring? There’s been talk of oversupply in Penang, with the number of new developments. What’s your take on this, and do you feel the company made the right move in venturing into Penang?
We first ventured into Penang in 2007 with the acquisition of several pieces of land to geographically diversify our landbank in Peninsular Malaysia, and to ride the exciting economic growth in the Northern Corridor. Furthermore, Penang has the third largest property market in Malaysia after Greater KL and Johor. Penang also has the second highest urbanisation rate in Malaysia, as well as the second highest average monthly household income, which is higher than the national average. So, it was a natural progression for us to venture into Penang.
Thus far, we have fully sold and completed our [email protected] project. We have an ongoing project called [email protected], which is gaining increasing interest and we look forward to new launches next year.
On talk about oversupply, we believe it all depends on the location and type of products being offered. Developers who are able to deliver the right products at the right location and at the right price should be able to do relatively well. Property experts have also acknowledged that the property market in Penang is booming. Residential prices may be rising due to higher demand than supply, but the extent of the escalation is much slower than markets such as Greater KL, Singapore and Hong Kong. Thus, for foreign investors, it is relatively cheaper to invest in Penang as similar projects in Hong Kong or Singapore may cost more.
With the increasing interest in Penang’s property market, we are happy that we were able to leave a mark on the Penang property market earlier and build our branding with the people in the north. Did we make the right move to venture into Penang? Definitely.
What’s the company’s remaining landbank? What plans do you have for replenishing the landbank? What are some of the hot spots or locations that you’re eyeing?
We have about 867 acres remaining, with a combined remaining GDV and unbilled sales of about RM14.5 billion. We will continue to seek prime land in Greater KL, Penang Island and Johor Baru. This year, the group is targeting land acquisitions that can potentially yield more than RM5 billion to RM7 billion in GDV potential.
What’s the outlook like for the local property market? Where do you see opportunities for the company?
We see continued demand for landed residential properties in good locations, especially in gated and guarded schemes. Investors know that land is scarce and construction costs will continue to rise, albeit in manageable doses. Hence, it is inevitable that properties in good locations will continue to appreciate as well, and astute buyers would want to lock in their investments at today’s prices. Demand is also moving towards well-located townships offering properties within the RM500,000 range. For the commercial segment, smaller SoHo and SoVo properties will continue to be popular due to the affordable price points and lack of such supply in selected locations. We also find well-sited semi-detached factories that have multiple uses [corporate office, warehousing and light manufacturing] to be in demand as supply is very low, only about 10%.
This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 878, Oct 3-9, 2011
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