Mah Sing Group Bhd is bullish about its property market strategy which focuses on the M-Series of affordably-priced high rises in the central business district and landed properties in strategic locations.
The group is on track to achieve its RM1.6bil sales target this year, after recording RM1.28bil in new property sales for the nine months ended Sept 30, 2021, thus achieving 80% of the 2021 sales target.
Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum points out that properties priced below RM500,000 accounted for more than 80% of housing transactions in the country, based on the central bank’s Financial Stability Review First Half 2021 report.
“We strongly believe that we are on the right track in launching the M Series, based on the healthy take-up this year amidst the pandemic. Mah Sing will stay focused on this strategy for 2022,” says Leong.
“We observed encouraging demand for affordably-priced properties, which drove us to proactively acquire lands for the past two years despite the pandemic,” he adds.
Leong explains that the group’s M Series, comprising high-rise and landed residential properties, mainly target first-time home buyers, working professionals, young families, and upgraders.
This year, the group inked three new land deals including 100 acres in Bandar Baru Salak Tinggi, Sepang for its M Senyum project which will have a gross development value (GDV) of RM681mil.
M Senyum, which is targeted to be launched in the first quarter of 2022, will consist of mainly affordable double-storey terrace houses with lot sizes of 20ft x 60ft, 20ft x 65ft, and 20ft x 70ft, priced from RM450,000.
Another land acquisition was for the M Astra mixed development in Setapak, Kuala Lumpur comprising two blocks of serviced suites and featuring some retail lots with plans to accommodate drive-through food and beverage outlets.
M Astra, which is targeted to be launched in Q2’22, will have three and four-bedroom units, with built-ups ranging from 850 sq ft to 1,044 sq ft, and will be priced from RM399,000.
The third land acquisition was for the M Nova mixed development in Kepong, sitting on 8.09 acres with a RM790mil GDV.
M Nova which will comprise serviced residences with indicative sizes of 700 sq ft, 850 sq ft, and 1,000 sq ft priced from RM318,000 per unit, supported by some retail components, is targeted for registration of interest in the first quarter of 2022 and is estimated to be launched in Q3’22, in line with Mah Sing’s quick turnaround model.
Other upcoming launches include Erica Phase 2 @ Meridin East, Johor consisting of 210 units of double-storey link homes on 18ft x 70ft lots priced from RM417,000 which will have a GDV of RM108.25mil.
Another launch to look out for will be the Delphy (last phase of M Aruna), Rawang consisting of 177 units of double-storey link homes on 20ft x 75ft lots priced from RM662,800 which will have a GDV of RM111mil.
Meanwhile, M Panora at Rawang will have a GDV of RM300mil and consists of 396 units of double-storey super-link homes on 24ft x 65ft, priced from RM650,000.
“We are continuously eyeing for more land, with Greater Kuala Lumpur, Klang Valley, Johor and Penang being the focus areas, as well as looking at other property hotspots in Seremban, Melaka and Perak to develop affordable landed homes,” says Leong, adding that the group is also actively seeking industrial land.
Meanwhile, for the “Come Home 2 Mah Sing” campaign, the group is leveraging on the work-from-home trend.
“Due to the pandemic, people perceive homes differently and now the home is increasingly becoming an office, a studio and a place to create,” says Leong.
In 2021, the group also introduced “Home with Mah Sing” followed by the “Come Home 2 Mah Sing” and “Mah Sing Now” campaigns which provided buyers with low down payments, payment free of up to four years (HouzKEY), low booking fees from RM500, save up to 50% off monthly payments, free sale and purchase and legal fees.
In line with the government’s extended HOC (home ownership campaign) and the current low interest environment, the “Mah Sing Now” campaign has been extended until Dec 31, 2021.
Leong also notes that the extension of the HOC until Dec 31, 2021 has indirectly encourage the sale of unsold properties.
He says the stamp duty exemption and a minimum 10% reduction in property purchase prices, combined with financing facilities supplied by banking institutions, have boosted the capacity of homebuyers, particularly the younger generation and first-time purchasers, to acquire their dream houses.
“This can help reduce the problem of property overhang. We hope the government will consider extending the HOC period for another year,” says Leong.
Meanwhile, more than 95% of the group’s employees have been fully vaccinated as of September 2021, which helped ensure prompt resumption of operations.
To drive innovation and improve operational performance, Mah Sing also invested in digital transformation and increased the use of digital marketing, launched virtual tours, set up video consultations, as well as online bookings and payments.
“This has resulted in successful launches and healthy take-up for our projects,” says Leong, adding that the group’s MY Mah Sing mobile app allows customers to check quarterly construction updates, statements of account and make key hand-over appointments.
“Moving forward, we intend to continue leveraging the strengths of our existing digital market platforms to boost sales by streamlining our processes from awareness to payments. In terms of customer engagement, all communications with buyers or prospective buyers are to be captured on a single platform with all the various marketing pipelines integrated. This will allow us to gain greater access to data and increase our visibility of performance,” he explains.
Regarding financial management, Leong says the group has been prudent and disciplined, with net gearing of not more than 0.5 times (including perpetual as borrowings).
He points out that this allows Mah Sing to maintain selective land bank expansion, concentrating on strategic land banks in the affordable segment.
“We will continue focusing on affordable properties, in line with our quick turnaround business model, and exploring new construction technologies to be more efficient in our construction cost management,” he says.
For more competitive procurement, Mah Sing has an in-house building materials trading section that sources raw materials in bulk from various suppliers.
“We continue to build a positive, long-term relationship with a large pool of panel contractors by ensuring prompt payment and continuity in contract awards with new launches,” said Leong.
He adds that the group’s projects are on track for delivery before their vacant possession dates, as during the lockdowns this year, the group’s eligible construction sites which met the requirements and standard operating procedures had obtained approvals to resume operations.
Leong also points out that the group was added into the FTSE4Good Bursa Malaysia Index in June 2021, which is a testament to its commitment to environmental, social, and governance (ESG) practices.
“We believe that understanding total development lifecycles, from feasibility studies, product development, design planning and optimization, through customer experience, branding and marketing, to final product launching, construction, and vacant possession, is the key to sustainability in our property business,” he explains.
Leong points out that during construction, Mah Sing uses the industrialised building system (IBS) and incorporates IBS elements such as prefabrication and system formwork whenever possible.
“System formwork’s high reusability, compared to traditional timber formwork, for example, reduces construction waste that is rarely recycled,” he says.
The group also prioritises passive design concepts as a means of maximising natural environmental qualities like natural lighting and ventilation.
To increase occupants’ well-being, materials and products with a lower environmental impact are used.
The group is also aware of the urban heat island effect, which is caused by dense urban development.
“As a result, our developments include greenery and landscape areas. Most of Mah Sing’s M-Series projects have more than 25% green spaces, as we are continually trying to enhance the provision of green spaces beyond the mandated 10% green spaces,” Leong says.
Mah Sing projects are also known for being in areas with good connectivity, and some of its projects are transit-adjacent developments to public transportation systems.
As for the group’s healthcare business unit, Mah Sing Healthcare Sdn Bhd, it recently obtained approval from the United States (US) Food and Drug Administration to market medical grade examination gloves in the US market.
Also, with the recent issuance of a Medical Device License from Health Canada and pending the completion of EU Medical Device Regulation (MDR) certificate, Mah Sing Healthcare will also be able to export medical-grade gloves to the United States, Canada and Europe.
Leong says the company will complete commissioning all 12 glove production lines by December 2021 and has received numerous customer sales enquiries.
“We foresee that demand for gloves is expected to remain steady due to a structural increase in demand, fears of reinfection, increased health awareness and hygiene compliance requirements for both the healthcare and non-healthcare sectors,” he says.
Meanwhile, Rakuten Trade Research has a “buy” call on Mah Sing’s stock, with a RM1.25 target price based on SOP (sum of parts) valuations, and premised on the group’s strong sales in recent quarters with unbilled sales of RM2bil, additional contribution from its glove business, and attractive dividend yields.
Rakuten Trade Research also notes that Mah Sing has a total remaining GDV of RM25bil over 2,051 acres of landbank.
However, the research unit has revised its estimate of Mah Sing’s net profit for financial year ending Dec 31, 2021 (FY21) downwards by 28% to RM110.6mil due to the lower production volume in glove manufacturing division because of operating restrictions during this year’s movement restrictions.
It notes that Mah Sing has been paying dividend of at least 40% of net profit for the past 15 years.
Rakuten Trade Research forecasts Mah Sing to pay dividend of 2.3 sen and 4.5 sen for FY21 and FY22, translating into yields of 3.2% and 6.4% respectively.
AmInvestment Bank Research maintains its “buy” call on Mah Sing with an unchanged SOP-based fair value of 95 sen.
AmInvestment Bank Research points out that the property development segment’s operating profit for the first nine months of FY21 (9MFY21) rose 66% year-on-year, due to a 13% increase in progress billings and construction activities.
Cumulatively, Mah Sing’s 9MFY21 new sales surged 51% to RM1.3bil (from RM847mil in 9MFY20).
The strong sales were mainly boosted by projects in the central region, particularly M Luna in Kepong (27%), M Centura/M Arisa (20%) in Sentul, M Vertica in Cheras (13%), M Adora in Wangsa Melawati (12%), Meridin East in Johor (8%) while the remaining projects made up 20%.