Mah Sing has capacity to borrow more

KUALA LUMPUR: Mah Sing Group Bhd’s low gearing ratio of 0.05 times as at March 31 has provided the group with the capacity to gear up further, said group managing director and group chief executive Tan Sri Leong Hoy Kum.

At a briefing yesterday, he said that should the company gear up to 0.5 times, there would be about RM400mil available for landbank acquisition.

However, he added that the group was not in a hurry to raise its borrowings as it was in cash flow positive position.

Leong said the group had so far acquired three parcels of land with a gross development value (GDV) of RM712mil and was still on the lookout for more land.

“We are constantly scouting for more landbank. We’re looking at land aggressively everyday,” he said.

As at March 31, Mah Sing has cash and cash equivalents of RM166.9mil.

For the year ended Dec 31, 2009, the group had cash and cash equivalents of RM356.6mil.

Executive director for corporate and investment Steven Ng Poh Seng said the company spent some of its cash in the first quarter to purchase three parcels of land, resulting in the lower cash hoard.

However, he said Mah Sing’s cash and cash equivalents had improved to RM233mil in May.

Leong said should the group decide to raise its gearing up to a 0.5 times, it would be a non issue as it was still “very comfortable”.

Meanwhile, he said the group was confident of achieving its RM1bil sales target for this year as it had achieved sales of RM601mil in the first quarter.

For the three months ended March 31, Mah Sing posted a net profit of RM27.8mil on revenue of RM238.8mil, driven by its residential and commercial projects.

Leong said Mah Sing had a strong earnings sustainability from the combined RM6.3bil in remaining gross development value (GDV) and unbilled sales. Its unbilled sales stood at of RM1.1bil.

“Mah Sing is cautiously optimistic that 2010 will be a good year for the Malaysian property market and backed by a good employment market, strong liquidity and still-conducive interest rate levels,” he said.

The group is also interested to participate in government tenders for land in Sungai Besi and Sungai Buloh to be developed by the private sector.On overseas expansion, Leong said Mah Sing was looking to venture into Vietnam, Singapore, Indonesia and Australia.

Leong said the group had signed a letter of intent on a joint venture basis with 51% stake to develop a mixed development project in Wujin District, Changzhou, China.

He expects overseas projects to contribue 30% to group revenue in the next five years.

By The Star