KUALA LUMPUR: Mah Sing Group Bhd’s net profit rose 27.9% to RM70.6 million for the third quarter ended September of 2013 financial year (3QFY13) compared with RM55.23 million a year earlier. Revenue improved by 27.5% to RM536.5 million over the previous corresponding quarter.
“Mah Sing achieved approximately RM2.25 billion sales for the first three quarters of 2013, and is on track to achieve its full-year sales target of RM3 billion,” it said in a statement yesterday.
The group’s unbilled sales of approximately RM4.185 billion as at Sept 30 this year, approximately 2.7 times the revenue recognised from the property development division in 2012, will provide strong earning’s visibility going forward, it said.
Net profit for the nine months ended Sept 30 increased by 19.8% to RM209.9 million and revenue by 7.6% to RM1.44 billion.
Revenue derived from property development was RM1.22 billion from RM1.17 billion the previous year, while the operating profit margin experienced a slight increase to 21.3% from 20.1%. As at Sept 30 this year, Mah Sing’s net gearing is 0.21 — comfortably below its internal target of 0.5 times. The group’s cash pile stands at RM788.1 million.
“The increase in revenue was attributable to the increasing contribution from mixed developments, and profit margin improved as a result of better product mix,” said Mah Sing.
Projects that contributed to the quarter’s results include those in the Klang Valley and Greater Kuala Lumpur (M Suites and M City in Jalan Ampang, Icon City in Petaling Jaya), Penang Island (Legenda at Southbay and Ferringhi Residence), and the Iskandar Region in Johor (Sierra Perdana, Sri Pulai Perdana 2).
“To date in 2013, the group has embarked on five land deals with a combined gross development value of approximately RM8.95 billion, exceeding its 2012 full-year landbank of RM7.38 billion by 21%,” the company said.
On concerns of dampening demand due to more stringent property regulations, Mah Sing group managing director Tan Sri Leong Hoy Kum said, “Buyers are digesting the new measures to be implemented, especially the real property gains tax, the removal of the developer interest bearing scheme (DIBS), increase of floor price for foreign purchasers and the implementation of the goods and services tax in 2015.”
“We believe demand will still be strong for property buyers who are buying to own or buying to invest for long-term rental income, which is why our products are targeting this market,” he said.
Mah Sing’s share price has fallen 8% from RM2.35 to RM2.16 since the announcement of Budget 2014, but Leong believes the group is among the less affected property developers.
“There could be a knee-jerk reaction as buyers digest the new measures to be implemented, but we believe this means buyers will take a slightly longer time to shop around rather than deferring or calling off their purchase,” he told The Edge Financial Daily in an email interview.
Leong said that since the start of the year, Mah Sing has stopped offering DIBS for most of its new previews and launches.
“Despite not offering DIBS, our new township of [email protected] South enjoyed overwhelming response; of its first four towers of Savanna Executive Suites, more than 75% of the total 1,532 available units were pre-selected within one month.
“Our newly launched Ferringhi Residence in Penang and Sutera Avenue in Kota Kinabalu have also seen strong interest despite not offering DIBS. In Iskandar Malaysia, none of the projects offer DIBS,” he said.
Of Mah Sing’s 36 ongoing projects, only two currently offer DIBS as a legacy marketing promotion, Leong said.
This article first appeared in The Edge Financial Daily, on November 12, 2013.
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