KUALA LUMPUR: Mah Sing Group Bhd recorded profit before tax of RM65.6mil on the back of revenue of RM669.8mil in the first half ended June 30,2020.
In a statement issued on Friday, it said that it achieved property sales of about RM418.6mil in the 1H and had an additional RM1.6bil sales bookings on hand.
“Balance sheet remained healthy with cash and bank balances of approximately RM1.13bill as at June 30, putting the group in a good position to continue focusing on increasing land banks in the Klang Valley, and exploring new business opportunities, ” it said.
Mah Sing continued to reward shareholders with a minimum of 40% net profit as dividends for the 14th consecutive year since 2006. Meanwhile, the dividend of 3.35 sen per share for FY19 shall be paid on Sept 29.
Mah Sing’s founder and group managing director, Tan Sri Leong Hoy Kum said the Movement Control Order (MCO) and conditional MCO were generally challenging for all developers, as site progress of all projects were halted during MCO and there were also delays in loan approvals for sales conversions.
Despite the relatively quiet market, he said Mah Sing launched M Luna in Kepong in June and M Adora in Wangsa Melawati in July, benefitting from its digitisation strategy to reach out to buyers.
Both launches achieved 90% take up for the maiden phase during their respective weekend launches.
“At present, we are focused on converting our RM1.6bil in sales bookings, clearing the existing stocks and to catch up with the construction progress of our projects, ” he said.
Leong said Mah Sing had recently delivered vacant possession of towers C and D of its Lakeville Residence at Taman Wahyu and tower A and B of its Cerrado at Southville City @ KL South, Bangi.
He also said Mah Sing was revising their 2020 sales target to RM1.1bil from RM1.6bil previously due to the longer period required to convert existing bookings to sales.
Although there was a jump in mortgage loan applications in June, the approval rate deteriorated to 24.6% compared to 32.6% in May 2020. This was primarily due to banks becoming more stringent in approving loans amid weak macroeconomic indicators.
For the remainder of 2020, the group plans to launch more projects in the affordable segment at strategic locations including Carya in M Aruna, Rawang, remaining blocks of M Vertica in Cheras and Ferringhi Residences 2 in Penang as well as Acacia, Jasmine 1 & 3 link homes in Meridin East, Johor Bahru.
Commenting on the first half results, Mah Sing said the group posted profit before tax of RM65.6mil on the back of revenue of RM669.8mil.
On a quarterly basis, the group recorded profit before tax of RM22.4mil and revenue of RM298.6mil.
In the first half, revenue from the property development was RM510.8mil whilst operating profit was RM75mil.
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, Ferringhi Residence and Southbay City in Penang, Sierra Perdana, Meridin @ Medini and Mah Sing i-Parc in Johor.
The quarter under review coincided with the imposition of MCO and CMCO to contain the Covid-19 pandemic.
Site progress of all projects were halted during MCO to comply with regulations during this period, and there were also delays in loan approvals for sales conversions, which weighed on revenue recognition.
Although operations had resumed during the CMCO, the level of activities on sites was generally lower due to adoption of strict standard operating procedures in compliance with relevant regulatory requirements.
“The plastics segment recorded revenue of RM132.3mil in the current period and is exploring new expansion opportunities in healthcare related products, ” it said
As for its strategy, Mah Sing said with disciplined financial management and a healthy balance sheet with cash and bank balances at about RM1.13bil as at June 30, the group continues to focus on increasing land banks in Klang Valley with key focus in the affordable segment.
“Echoing our strategy of fast execution and financial prudence, we have successfully launched all three lands that we bought in 2019.
“As a market driven developer, we are always on the lookout for prime lands to continue to rollout products that are in line with the market demand. At the same time, we also have remaining landbank of 2,005 acres with remaining gross development value and unbilled sales totalling approximately RM24.64bil as of June 30,2020, which can provide earnings visibility for at least eight years,
“The mid to long-term outlook remains positive supported by strong fundamental demand for property due to the young demography and strong household formation which outstrips annual supply.
“Malaysia’s population is still very young with 66% of population below 40 years old, contributing to strong household formation, ” Leong said.
Did you find this article insightful?
100% readers found this article insightful