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Monday, July 28, 2008

Reserves to help Mah Sing enter new markets

Mah Sing Group Bhd will be using its strengthening cash reserves to expand into new market frontiers in east Malaysia and Vietnam next year.

The company's cash pile of RM130.7mil as at March 31 will receive a boost with the scheduled completion of the en bloc sale of the east wing of The Icon@Tun Razak for RM236mil to Prompt Symphony Sdn Bhd by middle of next year.

Mah Sing's cash position was strengthened by a RM200mil capital raising exercise and proposed sale of two Grade A office buildings, The Icon@Tun Razak and The Icon@Mont'Kiara, for RM735mil last year.

Given the company's low gearing ratio of 0.03 times compared with the industry norm of 0.5 times, Mah Sing could also resort to bank borrowings for its regional expansion plans.

Datuk Seri Leong Hoy Kum

President and group chief executive Datuk Seri Leong Hoy Kum said the company was on track to become a regional lifestyle developer and some potential projects had been identified.

“We are in a very good position to make some opportunistic acquisitions.

“It is a good time to lock in land which have recently dropped in value and by the time the projects are launched in 2010, the regional economy should recover from the current slowdown,” Leong told StarBiz.

He said the company had been closely monitoring the situation in Vietnam and believed the country would recover from its current economic doldrums in the next six to nine months.

“There is still a severe shortage of houses for the country's 85 million people and our plans are to build landed residential projects and Grade A office buildings in high-growth cities,” he added.

Leong said Mah Sing was also looking at other strong growth countries including China, India and Indonesia.

In the next five years, the company's overseas projects will contribute 20% to 30% of group revenue.

Locally, Mah Sing is eyeing opportunities in Sabah and Sarawak to take advantage of the growth to be brought about by the Sabah and Sarawak growth corridors.

“The Sabah Development Corridor and the Sarawak Corridor of Renewable Energy have already attracted more than 30 foreign investors to each of the corridor.

“Kota Kinabalu's strong tourism sector offers big potential for the company to build its brand of themed commercial developments that include hotels, service apartments and shop offices,” he said.

Meanwhile, Mah Sing's 584 acres of undeveloped land bank have the potential to generate RM3bil in gross development value over the next five to seven years.

For the current financial year ending Dec 31, the company is looking at recording sales of RM560mil while new project launches will come up to RM706mil.

Citigroup Research, in a recent note, said that backed by high unbilled sales of RM1.1bil as at 31 March, Mah Sing could look forward to a three-year net profit compounded annual growth rate of 21%.

By The Star - StarBiz - (by Angie Ng)

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