Is Mah Sing Group Bhd Worth Investing In Now?

Mah Sing Group Bhd (Mah Sing) was listed initially as a plastic company on Bursa Malaysia in 1992. Two years later, Tan Sri Leong Hoy Kum has taken a strategic decision as its Group CEO to focus on property development as the group’s main source of income. Today, Mah Sing is a well-known and leading developer in Malaysia. It is valued at RM 2.5 billion in market capitalization.

In this article, I’ll list down 8 quick things that you need to know about Mah Sing before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: MAHSING / KLSE: 8583
Market Capitalization: RM 2.5 Billion (22 March 2018)

Share Price: RM 1.03 (22 March 2018)

Industry: Properties

Syariah Compliant: Yes

#2: The Business

Mah Sing Group Bhd derives income from two main business activities:

1. Property Development
   Mah Sing derives the bulk of its income from property projects based in the Klang Valley with Johor and Penang as its secondary markets. In 2017, Mah Sing has a handful of projects that have contributed to its revenue and profits. To name a few, these include Southville City, D’ Sara Sentral, Lakeville Residence, M Residence & M Residence 2, M City and Icon City. As stated earlier, Mah Sing’s property division is the main contributor of income to the group as it has reported sales of RM 2.55 billion and profits before tax (PBT) of RM 429.5 million for the year 2017.
    
2. Plastic
   Mah Sing remains involved in manufacturing, assembly and trading of plastic moulded products in Malaysia and Indonesia. This division has recorded RM 296.2 million and RM 13.9 million in sales and PBT respectively in 2017, thus, remains an insignificant contributor to the group’s financial results to-date.

#3: The Financials

Mah Sing has enjoyed growth in both group sales and shareholders’ earnings from 2008 to 2015. Group sales have increased from RM 651.6 million in 2008 to RM 3.11 billion in 2015. This has caused shareholders’ earnings to increase from RM 93.2 million in 2008 to RM 386.7 million in 2015.

In 2016 and 2017, Mah Sing’s growth in sales and profits have slowed. This is evident as it had maintained group sales and shareholders’ earnings between RM 2.9 – 3.0 billion a year and RM 360 – 365 million a year respectively.

Source: Annual Reports of Mah Sing Group Bhd

#4: Balance Sheet Strength

As at 31 December 2017, Mah Sing has RM 787.2 million of long-term debt. It has a total equity of RM 4.65 billion and thus, its current gearing ratio works out to be 16.9%. It is likened to one who long-term debt of RM 16.94 for each RM 100 he owns. Also, Mah Sing has reported having RM 1.14 billion in cash reserves, hence, placing itself into position for future land bank acquisitions.

#5: Future Prospects

Here are the key highlights of Mah Sing moving forward in 2018 and beyond:

1. Ongoing Projects
   As at 31 December 2017, Mah Sing has 32 ongoing projects which are inclusive of the 5 main projects stated earlier in Point #2. In 2018, the board has set a sales target of RM 1.8 billion where Mah Sing intends to achieve it from launches of M Vertica and M Centura in the Klang Valley, M Vista in Penang and phase 2 of Fern link homes in Johor.   
2. New Land Bank Acquisition
   In 2017, Mah Sing has made two major land bank acquisitions. They include M Vertica in Cheras measuring 11.2 acres in land size which is worth RM 2.2 billion in Gross Development Value (GDV) and M Centura in Sentul measuring 9.0 acres in land size which is worth as much as RM 1.3 billion in GDV. Collectively, as at 31 December 2017, Mah Sing has a remaining land bank of 2,125 acres where its potential GDV and its unbilled sales are worth RM 27.6 billion.

#6: Valuation

As I write, Mah Sing is trading at RM 1.03 a share.

In 2017, Mah Sing has reported earnings per share (EPS) of 12.53 sen. Hence, its current P/E Ratio works out to be 8.22.

In 2017, Mah Sing has reported having RM 1.42 in net assets a share. Thus, it has a current P/B Ratio of 0.73.

For the financial year 2017, Mah Sing has declared its first and final dividend of 6.50 sen. It is the fourth consecutive time that Mah Sing has paid out 6.50 sen in dividends per share (DPS). Although the payment date was yet to be fixed, Mah Sing has paid out its last three dividends in mid of September. So, based on current price of RM 1.03, its gross dividend yields are expected to be 6.31% a year.

The board has paid out at a minimum of 40% of its profits after taxes over 12 consecutive years and remains committed to doing so in future years to come.

#7: Investors Relation

For further enquiries or to request for additional investment information on Mah Sing Group Bhd’s Investors Relation matters, you may contact:
IR Team
Telephone: +603 9221 8888

Email: ir@mahsing.com.my

Website: http://www.mahsing.com.my/investor-relations

#8: Major Shareholders

As at 22 March 2018, the substantial shareholders of Mah Sing Group Bhd and their respective shareholdings are as followed:

– Mayang Teratai Sdn Bhd: 27.10%

– Mayang Teratai Ltd: 7.47%

– Employees Provident Fund Board: 9.16%

– Lembaga Tabung Haji: 5.81%

– Amanah Saham Bumiputera: 5.19%

– Kumpulan Wang Persaraan (Diperbadankan): 5.02%

Note:

Tan Sri Dato’ Sri Leong Hoy Kum is the ultimate major shareholder of Mah Sing Group Bhd with 0.43% in direct shareholdings and a total of 34.57% in indirect shareholdings held in Mayang Teratai Sdn Bhd and Mayang Teratai Ltd. Presently, Leong is appointed as the Group Managing Director / Group Chief Executive of Mah Sing Group Bhd.

His sister, Datuk Leong Yuet Mei is appointed as an Executive Director and his daughter, Jane Leong Jheng-Yi is now appointed as an alternate director to Tan Sri Dato’ Sri Leong Hoy Kum.

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