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Mah Sing makes cash call to trim gearing ratio

KUALA LUMPUR: Mah Sing Group Bhd is making a cash call to raise up to RM630 million, which is the second rights issue for the property developer in less than two years.

To sweeten the deal for shareholders, the rights issue would come with free warrants and may be priced with a likely discount to theoretical price of 20%. On top of that, Mah Sing is proposing a bonus issue on the basis of one-to-four to reward shareholders.

Mah Sing is the second property company that has announced a rights issue in the past two weeks.

“It (rights issue) will be used for land that we have acquired in Puchong and Seremban, and also for land development activities,” executive director Datuk Steven Ng Poh Seng said at the group’s briefing on its third-quarter results yesterday.

Some RM370 million will be earmarked for part-payment for land in Negeri Sembilan and Puchong in Selangor. It will also be used to fund payments over the next 12 months.

According to Ng, the rights issue will allow Mah Sing to source borrowings worth RM1 billion, which will be utilised to acquire land bank.

“The rights issue is going to be used for our existing land, which will ease gearing, and therefore allows us to borrow RM1 billion before hitting a gearing level of 0.5 times,” he explained.

Currently, Mah Sing’s total remaining undeveloped land bank stands at 3,658 acres (1480ha) and its remaining gross development value (GDV) is at RM44.8 billion. Its unbilled sales stood at RM5.1 billion.

Mah Sing reported a 21.7% jump on net profit to RM85.9 million  in the third quarter ended Sept 30 from RM70.6 million in the previous corresponding period. Revenue leapt 33% to RM713.6 million from RM536.5 million a year ago.

For the nine-month period, net profit grew 21.3% to RM254.7 million from RM209.9 million, while revenue surged 43.6% to RM2.06 billion from RM1.44 billion a year ago.

 

This article first appeared in The Edge Financial Daily, on November 21, 2014.

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