Mah Sing remains positive, sees value in company despite more subdued environment

PETALING JAYA: Despite the cooling measures for the property market, Mah Sing Group Bhd’s major shareholder is visibly confident that his company will not be negatively impacted.

Last Friday, Tan Sri Leong Hoy Kum exercised some 25.25 million warrants, moving his holdings in the property developer to 35.51% or 502.03 million shares. Leong forked out around RM50mil, paying an exercise price of RM1.98 per warrant for the 25 million shares.

Leong had received these warrants for free, stemming from last year’s rights issue, where he was alloted a total of 72.16 million warrants or a 35.88% stake. With last Friday’s exercise, he still has 46.891 million warrants, which observers say he will continue to exercise.

“Leong sees value in his company now. Furthermore, he does not want to be diluted and will want to maintain his indirect stake at the 34% to 35% level,” said the observer.

At end-December 2012, Mah Sing had announced a rights and bonus issue of one share for every five Mah Sing shares held after the rights issue with warrants.

Mah Sing had fixed the rights issue price at RM1.42 per rights share at an entitlement basis of one rights share for every three existing Mah Sing shares. The entitlement basis for the warrants was fixed as three free warrants for every five rights shares. Leong’s vehicle, Mayang Teratai Sd Bhd, had taken up some 50% of the rights issue.

This exercise raised close to RM400mil.

Presently, the warrants, Mah Sing warrant-b which expire in March 2018, is trading at a premium of 10.13% and a gearing of 4.37 times based on Mah Sing’s mother share which closed last Friday at RM2.27.

Leong had not been selling any Mah Sing shares in the last year, leading observers to reckon that this is a good show of confidence by the managing director of his own company.

Meanwhile, Mah Sing came out on top of a CIMB report on the property sector dated Jan 2, where CIMB maintained its “overweight” call on the sector.

CIMB Research Head Terence Wong, who has a RM3.03 target price for Mah Sing, said that the company would likely meet its ambitious RM3bil sales target for 2013. In fact, despite a larger base and a more subdued environment after Budget 2014, it wants to boost its new sales in 2014 to RM3.6bil.

“Management believes buying interest will pick up strongly in the second half of 2014 ahead of the implementation of the goods and service tax when inflationary concerns and fears of potentially higher property prices push buyers into committing to purchases. The group will continue to scout for new landbank in Malaysia and take advantage of any weakness in land prices during the lull,” said Wong.

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Business , Mah Sing , warrants , bonus , rights , Leong Hoy Kum


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