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Thursday, January 28, 2010

Mah Sing eyes RM1b in 2010 property sales

Malaysia’s Mah Sing Group Bhd aims for property sales to climb 39 per cent to RM1 billion (US$292 million) this year as an economic recovery spurs home purchases in the Southeast Asian nation.

The nation’s fifth-largest property developer sold RM720 million worth of properties last year, beating a target of RM453 million, managing director Leong Hoy Kum said in an interview in Kuala Lumpur yesterday. The impact of a possible increase in interest rates on property transaction will likely be minimal, he said.

“This year will be a good year; our engine is going to ramp up again,” Leong said.

Loans approved for Malaysian home purchases rose to RM7.3 billion in November, the highest recorded in 2009, central bank data shows. Malaysia’s central bank said on Jan. 26 borrowing costs can’t be kept “too low” for too long as growth strengthens, signaling it may raise interest rates sooner than some economists forecast.
“The tone of the central bank has raised concern there will be a slowdown in demand for loans,” said Ang Kok Heng, who oversees US$150 million of investments as chief investment officer at Phillip Capital Management Sdn Bhd. He said he doesn’t expect an increase in rates this year and property demand will probably rise.

Mah Sing spent RM323 million buying 184 acres of land last year to take advantage of “reasonable” asset prices when the Southeast Asian nation slipped into its first recession in a decade. The company is betting that an economic recovery spurred by RM67 billion in government stimulus measures will increase demand for new homes and offices.

‘Good Year’

Mah Sing’s total revenue surged almost fivefold in the past six years to a record RM1.2 billion in 2008. Third-quarter profit rose 42 per cent to RM23.5 million from a year earlier.

Shares of the Kuala Lumpur-based company climbed 15 per cent last year, falling short of the 45 per cent in the benchmark FTSE Bursa Malaysia KLCI Index.

The company will this year begin selling nine property projects with a gross development value of RM3.4 billion, Leong said.

The company aims to expand in markets including Vietnam, Australia and Singapore. Mah Sing in December agreed to form a venture with Danlong Realty (Beijing) Ltd. to develop a property on 87.31 acres in the city of Changzhou in China’s Jiangsu province, which will cost about US$620 million.

The estimated sales value of the project, of which Mah Sing owns 51 per cent, is more than RM3 billion, Leong said.

“As long as you are targeting the real market demand and you don’t go to areas like Beijing or Shanghai” the market is not in a bubble, he said.

The company is seeking land acquisitions and is preparing a RM1 billion “war-chest” for purchases in Malaysia and overseas, he said.

Leong said he wants to boost Mah Sing’s market value of about RM1.3 billion to RM5 billion within a couple of years. That would exceed the current worth of SP Setia Bhd, the country’s biggest developer by value.

By Bloomberg

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