Image from: Mah Sing

For the period ended 30 September 2020, Mah Sing Group Berhad (Mah Sing), Malaysia's renowned home-grown property developer, achieved property sales of approximately RM847.1 million, or 77% of the 2020 sales target of RM1.1 billion, amid the difficult market and operational conditions following the impact of this year's COVID-19 pandemic.

Mah Sing continues to be on track to meet its RM1.1 billion revenue target this year, backed by several new launches in the fourth quarter, along with the well-received projects recently launched, such as M Luna in Kepong and M Adora in Wangsa Melawati. It is expected that these affordably priced projects will continue to draw the interest of homebuyers.

Mah Sing’s Founder and Group Managing Director, Tan Sri Dato’ Sri Leong Hoy Kum said, “We are confident in achieving our RM1.1 billion sales target by the financial year end. The reintroduction of the Home Ownership Campaign and other property-friendly measures under the PENJANA stimulus package as well as the low interest rate environment are positive for the property market. The Group should also benefit from the 5 years stamp duty waiver for properties priced below RM500,000 for first homebuyers as introduced in the Budget 2021.”

With cash and bank balances and short-term investment of approximately RM1.13 billion, Mah Sing's balance sheet remains strong, while the Company has a current landbank of 1,996 acres with remaining gross development value and unbilled revenues totaling RM24.34 billion as at 30 September 2020. Mah Sing will continue to pursue selective land banking for continuous growth, backed by the group's prudent financial management and healthy balance sheet.

At the same time, the entry of Mah Sing into the proposed production of gloves through Mah Sing Healthcare is making progress in meeting the targeted production date of April 2021 and serving the pent-up demand for gloves.

The work at the glove manufacturing factory is progressing as scheduled, whereby the equipment supplier has commenced fabrication of selected parts of the machinery which needs to be fabricated in-situ at the factory. Installation of the initial lines has also started at the completed part of the factory.

The first 6 production lines are expected to be ready for operation as early as 2Q 2021, followed by a further 6 production lines which are expected to be ready by 3Q 2021. These 12 production lines are Phase 1 of the planned diversification into gloves proposed by Mah Sing and have a combined production capacity of up to 3.68 billion glove pieces per year.

The company is in a strong position to take advantage of the high spot price of gloves, as the factory is scheduled to start operating with 6 production lines as early as 2Q2021. Thus, Mah Sing expects the glove manufacturing business to be able to generate sales for the Group relatively quickly with the projected contribution estimated to come in as early as 2Q2021.


Q32020 Results

The Group’s current quarter profit before tax of RM40.5 million was higher as compared to the immediate preceding quarter of RM22.4 million mainly due to the resumption of operations with adherence to the necessary standard operating procedures during the Recovery MCO in the current quarter. Revenue of RM388.2 million for the current quarter was also higher as compared to the immediate preceding quarter of RM298.6 million.

For the nine-month period ended 30 September 2020, the Group posted a profit before tax of RM106 million on the back of revenue of RM1.1 billion.

Revenue from property development was RM811.9 million whereas operating profit was RM107.6 million for the nine-month period ended 30 September 2020. The nine months under review was affected by the lingering impact of Movement Control Order (“MCO”) when site progress of all projects came to a halt for nearly two months and Conditional MCO where level of activities on sites was generally lower due to adoption of strict standard operating procedures in compliance with regulatory requirements. The strict lending environment also affected sales conversion which weighed on revenue recognition.

In addition, contributions from matured projects like Lakeville Residence were lower as they were completed and handed over during the current period while new projects such as M Oscar, M Arisa, M Luna and M Adora are at initial stages of completion which results in minimal progressive billings for these projects.

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, M Luna in Kepong, Ferringhi Residence and Southbay City in Penang, Sierra Perdana, Meridin @ Medini and Mah Sing i-Parc in Johor.

For the plastics segment, it recorded revenue of RM204.7 million and operating profit of RM8.4 million in the current period.


Outlook for Q42020 and FY2020

According to Bank Negara Malaysia (BNM) in its third quarter gross domestic product (GDP) report on 13 November 2020, the country’s economy saw improvement in the third quarter of 2020 recording a smaller contraction of -2.7% (compared to -17.1 posted in the immediate preceding quarter (Q22020)), mainly driven by the reopening of the economy from COVID-19 containment measures and better external demand conditions.

The central bank expects the country’s economy to improve further into next year in line with better global demand and a turnaround in public and private sector expenditure amid various domestic policy support. In addition, the continued financial measures and low interest rate environment are also expected to lend further support for economic activities.

Moving forward, Mah Sing plans to launch more projects in the affordable segment such as Carya in M Aruna, Rawang and Acacia link homes in Meridin East, Johor, in the remainder of 2020. This will be driven by further emphasis on digital marketing efforts to reach out for interested home buyers.

Since early this year, the Group has also collaborated with Maybank Islamic to offer HouzKEY, an alternative financing solution under our ‘Eazy to Own’ campaign for selected Mah Sing projects. This home financing solution enables buyers to own their ideal home with easy entry and low monthly instalments, which is helpful to address homebuyers’ pain points and ease their homeownership journey.

“Mah Sing remains focused and is positive that its property projects will continue to gain traction from buyers. This is mainly driven by its projects that are located in strategic locations and offering the right products that are at affordable price points in line with market demand.” Tan Sri Dato’ Sri Leong Hoy Kum elaborated.

As a measure to enhance the Group’s medium-term financial performance, Mah Sing has also proposed the diversification of the principal activities to include manufacturing and trading of gloves and related healthcare products.

There have been rapid developments by major pharmaceutical companies around the world recently towards COVID-19 vaccine discovery, which is expected to help the recovery of those affected including economies and businesses globally, given the impact COVID-19 pandemic has brought upon since early this year.

Based on an RHB Investment Bank’s report dated 19 November 2020, a deployment of COVID-19 vaccine could be a new demand source for gloves, possibly up to 18 billion pieces per annum, having assumed that 60% of the world’s population of 7.5 billion people will get the vaccine in two doses annually. As each contact with a person should lead to the usage of one pair of disposable gloves, a vaccine development will generate demand of 18 billion pieces per annum in the short term, and that the demand will recur on an annual basis if the vaccine protection period is only up to a year.

Mah Sing believes that the demand for gloves is expected to remain strong post-pandemic, following stricter regulations and higher hygienic awareness. There is also room for further growth within the industry especially in emerging markets where glove consumption per capita is still low compared to developed countries.


(1 December 2020)