Mah Sing to expand landbank from RM400m raised

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KUALA LUMPUR: Mah Sing Group Bhd targets to expand its landbank following shareholders’ approval to raise up to RM400 million in a fund-raising exercise.

Managing director and chief executive Tan Sri Leong Hoy Kum said the group is evaluating new landbank in Greater Kuala Lumpur and the Klang Valley, Penang island, Johor Baru and Kota Kinabalu for its new acquisitions in 2013.

“We are still eyeing new acquisitions to boost our stable of projects, but we are very selective and there must be a compelling reason for us to buy the land,” he said after the company EGM yesterday.

Mah Sing went on an acquisition trail in 2012 to secure prime land, acquiring four parcels of land with a combined gross development value (GDV) of about RM5.88 billion. The company has RM545 million cash and a net gearing ratio of about 0.3.

“We have a very healthy gearing ratio, coupled with cash. We have built enough buffer and reserves for future acquisitions of land,” said Leong.

Mah Sing has set a sales target of at least RM3 billion for 2013, a 20% increase from 2012.

Noting that Greater Kuala Lumpur and the Klang Valley are Malaysia’s economic and property hotspots, Leong said these areas would make up the bulk or 62% of 2013’s sales target.

“Johor Baru is expected to contribute 20%, Penang island 13%, and the balance of 5% from Sabah,” he added.

Mah Sing’s property sales for 2013 are expected to be boosted by the launch of six new projects, on top of its existing projects.

Leong said the six new projects have a combined GDV of about RM7.4 billion.  Mah Sing currently has 40 high-rise and landed residential, commercial and industrial projects.

“These projects have GDV and unbilled locked in sales of about RM19.3 billion, enough to sustain us for the next six to seven years,” added Leong.

Leong: We are very selective and there must be a

compelling reason for us to buy the land.

The group’s buyers are mainly local professionals, business people and SMEs, with foreign buyers making up less than 10% of the group’s sales.

The fundraising exercise included a renounceable rights issue with free warrants, followed by a one-for-five share bonus issue.

The entitlement date for the rights issue with free warrants is expected to take place by end February 2013. The new shares from the rights issue and warrants are expected to be listed by mid-March.

Leong described the exercise as part of the company’s prudent management of capital structure to maintain a healthy and optimum capital base.

While interest is expected to be strong for the rights issue with free warrants, Mayang Teratai Sdn Bhd, a major shareholder of Mah Sing, has provided an undertaking to take up to 50% of the rights issue.

The group has also been rewarding shareholders with dividend payouts of a minimum of 40% of its net profit since 2006.

 

This article first appeared in The Edge Financial Daily, on February 6, 2013.

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