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Mah Sing announces new acquisitions

KUALA LUMPUR: Mah Sing Group Bhd announced the acquisition, via its wholly owned subsidiary Sierra Peninsular Development Sdn Bhd, of a plot of prime land in Petaling Jaya measuring 19.6 acres. The land was acquired from Panasonic HA Air-Conditioning (M) Sdn Bhd for RM89 million.

Situated in a strategic location of the central commercial area of Petaling Jaya, at the crossroads of the Klang Valley’s two busiest expressways – Lebuhraya Damansara-Puchong (LDP) and the Federal Highway – Mah Sing plans to develop the land into a commercial development of comprising shopoffices, semi-detached offices, SOHOs and retail units. The estimated gross development value (GDV) of the project is RM838 million and it will be developed over five years.

The company also announced the acquisition of approximately 26 acres of freehold development land in the mature township of Selayang by its wholly owned subsidiary Nova Century Sdn Bhd for RM41.65 million.

Mah Sing views the acquisitions as strategic moves to allow the group to tap on the success and spillover demand of its Perdana Residence development, which saw a take-up rate of 95% within two weeks of its launch in 2006, with secondary capital appreciation of approximately 15% to 20%. The land will be developed into a gated and guarded residential development to be named Perdana Residence 2, comprising mainly super link homes with an estimated GDV of RM209 million.

With the government’s push for green technology as announced in Budget 2010, Mah Sing will explore the incorporation of green features into this latest commercial project while continuing to integrate eco-friendly features in its properties and increasing the environmental friendliness of its developments.

Mah Sing’s group managing director/group chief executive Tan Sri Leong Hoy Kum said: “Mah Sing is a trendsetter, developing award-winning lifestyle residential properties and investment-grade commercial properties. We believe that the project can be a success by riding on our branding, concepts and products, especially after our resounding commercial success with The Icon Jalan Tun Razak, Southgate and StarParc Point in Kuala Lumpur.”

Mah Sing recorded a profit after tax and minority interests (PATMI) of RM23.5 million for 3Q2009, against RM16.5 million for the previous year’s corresponding period. The year-to-date nine-month PATMI of RM69.2 million is lower than the previous year’s corresponding period of RM76.1 million mainly due to timing as The Icon Jalan Tun Razak, East Wing was at an advanced stage of construction when the en-bloc sale transaction was completed in 2Q2008. The group reported a cashflow of approximately RM120.4 million as at Sept 30, 2009. 

“We have overshot our full-year sales target by approximately 1.4 times, achieving RM615 million for the first three quarters of 2009 against our full-year sales target of RM453 million. We believe that the property market is gaining momentum for a likely up cycle in the second half of next year, and have planned ahead to meet the coming demand with several land acquisitions. The two pieces of prime land in the mature townships of Selayang and Petaling Jaya can yield an estimated total gross development value of RM1.05 billion. We are also embarking on a private placement that can potentially raise gross proceeds of RM103 million,” said Leong.

Mah Sing has an optimistic outlook for Malaysia as a compelling investment destination, given the government’s proactive approach in spurring economic activities and growth, the conducive financing environment with low interest rates and good financing packages that have improved affordability for Malaysians. Bank Negara Malaysia’s June 2009 mortgage loans approval figures show a 13.9% month-on-month increase, and reveals that residential property loans have risen to an all-time high of RM7.1 billion. 

“At 42.3%, Malaysia has the third-highest savings rate in the region, and this liquidity coupled with low returns on fixed deposit rates have made property an attractive investment. Affordability is improved due to benign interest rates, which are expected to remain low to support economic growth. The new scheme allowing further draw downs from EPF Account 2 to finance first house purchases will further increase affordability as it enables buyers to obtain higher financing for their properties. There is still stable employment, with increases in wages and re-hiring, especially in the manufacturing sector, as well as improvement in both consumer and business conditions indices in 2Q2009.  All these should result in sustained or improved property demand in the coming months in anticipation of asset reflation as our properties are still among the cheapest in the region,” said Leong.

The group currently has approximately RM5.4 billion remaining GDV and future progress billings from its property development projects in the Klang Valley, Johor Baru and Penang island.

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