Mah Sing Group Berhad (Mah Sing) successfully achieved its sales target of RM1.1billion for the financial year ended 31 December 2020, driven by its strategy in digital marketing and affordable properties offered at strategic location, namely in Klang Valley, Penang and Johor, notwithstanding the challenging market environment throughout most of the period following the impact of COVID-19 pandemic.
Continuing the momentum, Mah Sing also saw strong uptake in sales figures at the start of 2021 where the Group achieved approximately RM250million sales within the first two months. With the achievement of RM1.35billion in sales in the past 14 months and in line with a better property outlook this year, the Group is now setting a higher sales target of RM1.6billion for the entire 2021, with 91% of products priced below RM700,000, and 51% below RM500,000.
Mah Sing will focus on affordable landed homes in the outskirts/suburban areas and affordable high rises in the central business district areas as the Group believes this is where the demand remains resilient. In addition, Mah Sing will also continue with its quick turnaround business model to acquire more prime lands at strategic locations, whilst being nimble and flexible to change to match the market demand. With its strong cash and bank balances of approximately RM1.16billion as of 31 December 2020, the Group will continue selectively scouting for the strategic land bank for continuous growth.
Mah Sing has recently announced that the Group will be developing a new 100 acres of land in Bandar Baru Salak Tinggi – M Senyum, which has an estimated gross development value (GDV) of approximately RM656million. Based on preliminary plans, the development is planned to be a landed residential project comprising mainly affordable double-storey terrace houses with an indicative land size of 18’X65’ and 20’X70’. The project is indicatively priced from RM399,000, with the registration of interest and launching targeted to be in the second half of 2021. This marks the first land deal of Mah Sing in 2021.
With the new land, the Group has a remaining landbank of 2,076 acres with a remaining gross development value and unbilled sales totaling of approximately RM24.64billion which can provide earnings visibility for at least 8 years.
Q42020 and FY2020 results
For the cumulative 12-month period ended 31 December 2020, the Group posted a profit before tax of RM153.7million on the back of revenue of RM1.5billion. Mah Sing’s Q42020 profit before tax of RM47.6million was higher as compared to the immediate preceding quarter of RM40.5million mainly due to increased contribution from on-going projects namely M Vertica and M Centura. Revenue of RM472.8million for Q42020 was also higher as compared to the immediate preceding quarter of RM388.2million.
On the property development front, revenue was RM1.2billion while operating profit was RM148.1million for the 12-month period ended 31 December 2020. The 12 months under review was affected mainly by the lingering impact of Movement Control Order (MCO) and Conditional MCO where level of activities on sites were generally lower. The strict lending environment also affected sales conversion which weighed on revenue recognition.
In addition, contribution from matured projects like Lakeville Residence was lower as it was completed during the current year while new projects such as M Oscar, M Arisa, M Luna, and M Adora were at initial stages of construction with minimal contribution.
The development projects which contributed mainly to the Group's results include M Vertica in Cheras, M Centura in Sentul, Southville City in KL South, Meridin East in Johor, and Lakeville Residence in Jalan Kuching. Other projects which also contributed include M Oscar in Off Kuchai Lama, M Aruna in Rawang, M Luna in Kepong, M Adora in Wangsa Melawati, Ferringhi Residence, and Southbay City in Penang, Sierra Perdana, Meridin @ Medini, and Mah Sing i-Parc in Johor.
For the plastics segment, it recorded revenue of RM288.2million and an operating profit of RM17.2million in the financial year ended 31 December 2020.
Dividend Payout of Minimum of 40% For 15th Consecutive Year
Mah Sing is continuing its track record of rewarding shareholders and is proposing a first and final dividend of 1.66 sen per ordinary share for the financial year ended 31 December 2020, subject to shareholders’ approval in the upcoming Annual General Meeting. Mah Sing has been consistent in paying dividend rates of at least 40% of net profit over the last 15 years, upholding its commitment to reward shareholders while maintaining a prudent and disciplined approach for long-term sustainable growth.
Higher Sales Target for 2021 of RM 1.6billion, 91% of Residential Sales Target Priced Below RM700,000
Having successfully achieved its sales target of RM1.1billion property sales for 2020, Mah Sing has set a higher sales target this year of RM1.6billion, with 91% of products priced below RM700,000, and 51% below RM500,000.
According to Bank Negara Malaysia (BNM) when announcing the “Economic and Financial Developments in Malaysia in the 4th Quarter of 2020” on 11 February 2021, the Malaysian economy is expected to recover supported by better external demand and the 2021 Budget measures, with the growth trajectory is projected to improve from the second quarter onwards. The central bank added the vaccine roll-out which will commence this month is also expected to lift sentiments.
As a market-driven developer, Mah Sing constantly listens to market feedback, tailoring its business strategies and product offerings in matching the home buyers’ needs. This can be seen through the positive response from the Group’s latest project launches in December 2020 which reflect the gradual improvement in sentiments towards the property market.
Housing affordability has remained a point of discussion following the different preferences across various buyers’ segments and categories. For instance, younger homebuyers might choose to occupy properties located in cities given the convenience, facilities, and good security offered, while older generations and families meanwhile may tend to seek for bigger space to accommodate the size of their household, which Mah Sing plans to cater to their respective needs via its broad product mix. This serves as an impetus for Mah Sing to continue tapping into this affordable segment, in view of the resilient demand.
Looking ahead, Mah Sing has a list of planned new launches for 2021, which include Tower E of M Vertica, Cheras, remaining phases of M Arisa, Sentul, Phase 2 of Cerrado Suites and Tower B Sensory Residences at Southville City @ KL South, Phase 3 of M Aruna and M Panora in Rawang, M Senyum in Bandar Baru Salak Tinggi, Sepang, service apartments in Southbay City, Penang and double-storey link homes in Meridin East, Johor Bahru.
The Group also recently launched the “Home with Mah Sing” campaign that runs for the first quarter of 2021, which offers easy payment schemes and various incentives to ease homeownership for selected projects under Mah Sing, such as low booking fees from RM500, free SPA and legal fees.
Aside from the launch of the “Home with Mah Sing” campaign, Mah Sing has maintained its strong start for the year 2021. In January 2020, the Group has celebrated its first topping up ceremony of the year for M Vertica’s Tower A in Cheras while the upcoming launch of the last tower, Tower E is also expected to happen in Q2 2021. In addition, Mah Sing is also expected to celebrate the topping up for M Centura within the first half of the year.
Mah Sing’s First Glove Manufacturing Factory on Track to Start Its Initial Production By April 2021
The glove manufacturing factory in Kapar, Klang is currently at an advanced stage of completion, on track to meet the target production date of April 2021, and is expected to contribute positively to the Group’s financials commencing from the second quarter of 2021.
Many civil works have been completed, with the factory’s interiors fitted with mechanical and electrical (M&E), furnishings, and equipment, while the dipping lines are now at an advanced stage of completion.
The first 6 production lines will be on track to be operational in 2Q 2021, followed by another 6 lines expected to be ready in 3Q 2021. These 12 production lines are Phase 1 of Mah Sing’s diversification into gloves, which has a maximum capacity of up to a 3.68billion pieces of gloves per annum – at a speed of 38,000 pieces of gloves per production line per hour.
According to Hong Leong Investment Bank (HLIB) Research sector report dated 16 February 2021, glove demand and average selling prices (ASPs) will be driven by testing frequency and vaccine roll out using gloves for the foreseeable future. For the remainder of the calendar year 2021 (CY21), HLIB Research expects the vaccination demand for gloves to more than offset the decline from testing demand. The research firm also expects there to be a supply shortage of circa 12.4billion pieces in CY21, even with global supply expected to rise by approximately 20% from existing players ramping up production capacities and newer players entering the market.
As a result of more stringent regulations and higher awareness on the importance of hygienic practices, especially in emerging markets where the glove consumption per capita is still low, Mah Sing believes that the demand for gloves is expected to remain resilient post-pandemic.
(27 February 2021)