Mah Sing confident of RM1.6bil sales target

  • Corporate News
  • Saturday, 13 Jun 2020

Latest project: M Luna units facing the south will be overlooking the majestic skyline of Kuala Lumpur, with views of skyscrapers such as the Petronas Twin Towers, Kuala Lumpur Tower, the Exchange 106 and the Merdeka 118 Tower.

Mah Sing Group Bhd is confident of achieving its RM1.6bil sales target for 2020, underpinned by developments in strategic locations with attractive price points and packages that boast innovative layouts and designs.

Founder and group managing director Tan Sri Leong Hoy Kum is cautiously optimistic that the company’s projects will be able to garner buyer interests despite the challenging market environment.

“We are maintaining our sales target for 2020, with 84% of our products priced below RM700,000. This includes M Luna in Kepong and M Adora in Wangsa Melawati, which are targeted for launch on the weekend of June 13 and 14 and mid-July respectively, ” he tells StarBizWeek.

The group’s upcoming planned launches for the remainder of 2020 include M Vertica Tower 5, a high-rise residential in Cheras, Kuala Lumpur (starting from RM480,000); M Adora, Wangsa Melawati (high-rise residential from RM468,000); M Luna, Kepong Metropolitan (high-rise residential (from RM385,000); Carya, M Aruna, Rawang (link homes from RM550,000); Sensory 2 and Cerrado 2, Southville City (high-rise residential from RM405,000): Acacia and Jasmine @ Meridin East (from RM498,000) and Ferringhi Residence 2.

At present, the group has 50 projects across the fastest growing regions in Malaysia, namely Greater KL (69%), Johor (21%) and Penang (10%). As at March 31,2020, Mah Sing has remaining landbank of 2,019 acres with remaining gross development value and unbilled sales totalling about RM24.86bil.

The group’s cash and bank balances stood at RM1.05bil as at March 31,2020.

Leong notes that the immediate term outlook is affected by weak market sentiment due to the Covid-19 pandemic, coupled with the tight lending environment and cooling measures introduced since 2014.

“Together with the Real Estate and Housing Developers Association, we have been reaching out to the government on initiatives that will help the recovery of property industry.”

Some of the initiatives proposed such as reintroduction of the Home Ownership Campaign (HOC), the uplift of 70% margin of financing limit for third housing loan onwards and the real property gains tax exemption have been granted by the government in the National Economic Recovery Plan (Penjana) announced on June 5.

Leong says the introduction of the HOC is timely.

“The reintroduction of the HOC is particularly appreciated as we secured 60% of our sales in 2019 from the previous HOC campaign. This bodes well for us to work towards achieving our 2020 sales target of RM1.6bil.”

He says the reintroduction of HOC for residential properties from RM300,000 to RM2.5mil until May 31,2021, which includes stamp duty exemption on the instruments of transfer for residential properties limited to the first RM1mil of the home price, as well as full stamp duty exemption for loan agreement, would be catalysts to spur more activities in the property market.

“Looking ahead, we will continue to roll out innovative marketing campaigns to enhance our buyers’ home ownership journey.

“Earlier this year in February, we launched our Eazy to Own campaign, aimed at enabling home buyers to own their dream home with a financing plan that is easy on their wallet while addressing their pain points.”

Leong is hopeful that the government will consider introducing more property friendly policies.

“The property sector is the key driver for over 140 sub-sectors in Malaysia and the property market has been down since the introduction of cooling measures in 2014.

“The measures can include loan tenure of up to 45 years, discount on development charges, reducing other compliance costs borne by developers, lower foreign purchase threshold to RM500,000 and relaxation of lending for mortgages.”

Leong is optimistic that the mid-to-long term outlook would remain positive.

“This is supported by strong fundamental demand as properties remain among the safest forms of asset class for long-term investment and it is also a good hedge against inflation.”

He says market demand for houses in the affordable segment is expected to remain resilient, particularly for first-time home buyers.

“We have a large demographic where the population is still young, averaging at 29 years old and who do not yet own their first home. As such, household formation continues to be strong.

“From 2013 to 2018, the annual increase in number of household averages 214,000, far outpaced annual new supply of completed homes at 92,000 units. In terms of gross domestic product (GDP), the International Monetary Fund and Bank Negara have forecast positive growth for 2021 global and Malaysian GDP.”Overcoming challenges

To tackle the rise in Covid-19 infections in the country, the government implemented the MCO on March 18. On May 4, a conditional MCO (CMCO) was enforced to allow businesses to re-open for the economy to recover.

In light of the challenges brought upon by the Covid-19 pandemic, Leong says Mah Sing has been ramping up its digitalisation capabilities to market its products.

The digital initiatives are also part of the group’s ongoing transformation journey and business continuity plans (BCP) to remain resilient, going forward.

“We have adopted digital technology even before the MCO. In fact, we are one of the early proponents of innovation in Malaysia’s property industry.

“We engaged IT platforms across our operations and processes, which include vacant possession, data analytics and defects management. We also adopted the industrial building system in Rawang as our pilot project.”

Leong says this is Mah Sing’s next step in its pursuit towards integrating digitalisation in every part of the home ownership journey, from sales and marketing to construction management; quality assurance; customer experience and property management.

“We have been proactively rolling-out various digitalisation initiatives across all aspects of our business such as sales, project, customer service and upskilling our staff through company-wide, nation-wide retraining and roll-out of Microsoft teams.

“The group’s digitisation capabilities are key to its BCP, which was activated to mitigate the effects of the Covid-19 pandemic. It pre-emptively initiated the rollout of collaboration tools to ensure seamless communication and business processes.”During the MCO, Leong says Mah Sing was able to have a smooth migration of its full workforce towards remote working.

“All of our client-consultation meetings were held online. We successfully integrated key parts of our digitalised sales processes, which include the launching of virtual show units on our official website; boosting of more digital campaigns, conducting online bookings and payments, as well as adding incentives for sales conversion since.

“We also commenced a full set up of remote customer-care line.”

Leong says ongoing digitalisation efforts have propelled the group’s reach to its valued buyers, which he believes is in line with what the future entails for the industry.

“We foresee increased digitalisation across all business aspects in the future. Moving forward, we intend to continue leveraging on the strengths of our existing digital market platforms to boost sales by streamlining our processes from awareness to bookings and conversations to be captured on a single platform with all the various marketing pipelines integrated.

“This would allow us to gain greater access to data and increase visibility on performance.”

Apart from digitalisation initiatives, Mah Sing has also incorporated several cost-saving measures to improve the group’s financial performance and achieve better efficiency.

“These measures include retraining and redeploying staff members for better work efficiencies, having more digital marketing, deferring non-essential capital expenditures, exploring cost efficient construction via value engineering and temporary recruitment freeze.”

As a market-driven developer, Leong says Mah Sing always tailors its business strategies and product offerings to meet the current market demand.

“Thus, we welcome any joint-venture prospects with landowners should the opportunity arise. However, in any business ventures, we will conduct the proper due diligence and market feasibility study to determine any potential prospects, ” he says.

Mah Sing recorded a net profit of RM30.1mil for its first quarter ended March 31, compared with RM55.01mil in the previous corresponding period, while revenue in the first three months of the year stood at RM371.13mil compared with RM450.33mil a year earlier.

Leong says Mah Sing received bookings of RM350mil during the initial 60-days of the MCO period, adding however that conversions were delayed as stamp offices were not opened and bank officers were working from home.

Citing Bank Negara statistics, he says the mortgage approval rate is still low at 44% in the first quarter of 2020.

“Other than the reduction in interest rate, there has not been any easing of loans approval by banks. Our conversion rate is in the range of 50% to 70% as we normally have at least five to six banks that support the end financing of our individual projects because we target affordable homes in good locations.

“As a result, our buyers have a wider choice of banks to apply for mortgage financing. We also negotiate with the banks for better margin of financing.”

Leong adds that the group is also working with Malayan Banking Bhd’s HouzKEY rent-to-own scheme.

“It is an alternative financing scheme to help those who cannot get their conventional bank loans approved. We also faced some challenges in our operations and sales conversion as our construction sites had to temporarily stop operations during the MCO.

“Currently, eligible construction sites of the group, which have met the requirements and standard operating procedure (SOP), set during the CMCO period have gradually resumed operations.

Leong says strict SOP, especially with regards to hygiene and sanitation for offices premises, sales galleries and construction sites have also been set up and followed.

“These measures will lessen the impact of MCO and allow us to catch up on work progress in the office and on-site.”

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