Mah Sing targets RM1b sales in 2010

The nation’s fifth-largest property developer sold RM720 million worth of properties last year, beating a target of RM453 million, its managing director Tan Sri Leong Hoy Kum said in an interview here on Thursday Jan 28. The impact of a possible increase in interest rates on property transactions will likely be minimal, he said.

"This year will be a good year; our engine is going to ramp up again," Leong said.

Loans approved for Malaysian home purchases rose to RM7.3 billion in November, the highest recorded in 2009, central bank data shows.

Malaysia’s central bank said on Tuesday borrowing costs can’t be kept "too low" for too long as growth strengthens, signalling it may raise interest rates sooner than some economists forecast.

"The tone of the central bank has raised concern there will be a slowdown in demand for loans," said Ang Kok Heng, who oversees US$150 million (RM511.5 million) of investments as chief investment officer at Phillip Capital Management Sdn Bhd. He said he doesn’t expect an increase in rates this year and property demand will probably rise.

Mah Sing spent RM323 million buying 184 acres of land last year to take advantage of "reasonable" asset prices when Malaysia slipped into its first recession in a decade.

The company is betting that an economic recovery spurred by RM67 billion in government stimulus measures will increase demand for new homes and offices.

Mah Sing’s total revenue surged almost fourfold in the past six years to a record RM651.6 million in 2008. Third-quarter profit rose 42% to RM23.5 million from a year earlier.

The RM1 billion sales target is "not beyond their reach," said Terence Wong, an analyst at CIMB Investment Bank Bhd. "I’m quite bullish about the property sector." Shares of the Kuala Lumpur-based company were unchanged at RM1.80 at 10:30am local time yesterday. They climbed 15% last year, falling short of the 45% in the benchmark FTSE Bursa Malaysia KLCI Index.

The company will this year begin selling nine property projects with a gross development value of RM3.4 billion, Leong said.

The "current up-cycle in the property market will benefit Mah Sing", RHB Research said in a report yesterday. It rated the stock a new "outperform" with a share price forecast of RM2.15.

The company aims to expand in markets including Vietnam, Australia and Singapore. Mah Sing in December agreed to form a venture with Danlong Realty (Beijing) Ltd to develop a property on 87.31 acres in the city of Changzhou in China’s Jiangsu province, which will cost about US$620 million. The estimated sales value of the project, of which Mah Sing owns 51%, is more than RM3 billion, Leong said.

"As long as you are targeting the real market demand and you don’t go to areas like Beijing or Shanghai" the market is not in a bubble, he said. The company is seeking land acquisitions and is preparing a RM1 billion "war-chest" for purchases in Malaysia and overseas, he said.

Leong said he wants to boost Mah Sing’s market value of about RM1.3 billion to RM5 billion within a couple of years. That would exceed the current worth of S P Setia Bhd, the country’s biggest developer by value. — Bloomberg