Mah Sing eyes more industrial lands to gear up for trade diversion opportunities

KUALA LUMPUR (June 26): Mah Sing Group Bhd is prepared to spend up to RM1 billion on land acquisitions this year, which may include more industrial land banks in view of opportunities arising from trade diversions as a result of the ongoing US-China tensions.

The group said now is a good time to lock in potential good land bank that meets its business model and criteria, given the group’s healthy balance sheet and the less intense competition between developers.

Speaking to reporters after Mah Sing’s annual general meeting here today, group managing director Tan Sri Leong Hoy Kum said the group is eyeing to acquire more industrial lands to cater to demand from Chinese manufacturers which are looking to shift base to Southeast Asian shores.

“At the moment, we have remaining gross development value (GDV) and unbilled sales of RM25.1 billion, which can provide us with earnings visibility for the next eight to nine years. But of course, we will continue to replenish [our landbank].

“Industrial is another important area that we are looking at right now, besides residential. With the US-China trade tensions now, a lot of these Chinese manufacturers are thinking to relocate to Southeast Asia and Malaysia is one of the countries they look at,” he said.

Mah Sing’s cash and bank balances stood at RM1.3 billion as at end-March, half of which is free cash flow. It is also prepared to leverage on bank borrowings up to 0.5 times in gearing if needed.

Its land bank totals about 2,099 acres, with GDV and unbilled sales worth RM25.1 billion. Of this RM25.1 billion, 61% are from residential developments and 33% commercial, with the remaining 6% industrial, spread across Greater Kuala Lumpur, Johor, Penang and Sabah.

Meanwhile, Leong maintained that the group is confident of achieving its minimum sales target of RM1.5 billion this year.

“We are in the right segment and most of our projects are transit-oriented developments. And 81% of our projects are priced below RM700,000, catering to the M40 (medium 40%) buyer group.

“When the market recovers, we will continue to deliver some high-end products that will cater to the T20 group,” he added.

At 3pm, shares in Mah Sing were unchanged at 91 sen, bringing it a market capitalisation of RM2.21 billion.

Source: TheEdgeMarkets