Mah Sing: Demand still high for DIBS

KUALA LUMPUR: Property developer Mah Sing Group Bhd group managing director Tan Sri Leong Hoy Kum said any measure by the central bank to curb developer interest-bearing schemes (DIBS) should take the current market condition into consideration.

This follows reports in the local media that Bank Negara Malaysia was studying the risks arising from DIBS with a view to implementing measures to curb it. "We can't comment too much now as there have not been many announcements, but generally the lending environment is still conducive and the interest rates are still low due to the competitive market,” Leong said after the company AGM yesterday.

He added that banks are selective in offering DIBS to developers and market demand is still high for the scheme.

DIBS is a financing package launched a few years ago. It is a scheme where a property developer absorbs the home loan interest of the homebuyers during the construction period of a property.

Mah Sing offers DIBS for some of its projects, depending on the market demand. The developer does not offer DIBS for its commercial and landed residential properties.

On the company's property development, executive director Datuk Steven Ng Poh Seng said that with a cashpile of RM822 million and a low net gearing ratio of 0.19 times as at March 31 the group plans to grow its landbank, especially in the Klang Valley."We are scouting for more land,” said Leong, adding that the company will also look at land in Iskandar Malaysia, Penang as well as Kota Kinabalu, Sabah.

Mah Sing has set a RM3 billion sales target for the financial year ending Dec 31, 2013 (FY13), after achieving RM2.5 billion new sales last year. With its RM750 million new sales in the first quarter (1Q), Ng said Mah Sing is on track to achieve the RM3 billion sales target.

The group garnered RM436 million sales from in the Klang Valley in 1Q with RM57 million from Penang, RM175 million from Johor and RM83 million from Sabah.

Additionally, out of the RM3 billion targeted sales, the group expects 62% to be generated from Kuala Lumpur, 13% from Penang, 20%  from Johor and 5% from Sabah.

The property player is currently sitting on 1,391 acres (562ha) with a total gross development value (GDV) of RM24.31 billion, which should last for seven to eight years, said Ng.

Mah Sing is also planning to have RM3.7 billion worth of launches this year."We have RM3.55 billion unbilled sales as at end of March, which is 2.3 times our property revenue last year,” said Ng.

For this year, the group has acquired four parcels of land with a combined GDV of RM7.78 billion thus far.

The four parcels of land include Damansara Sentral in Kuala Lumpur (with a GDV of RM900 million), Lakeville Residence in Taman Wahyu, Kepong (GDV of RM1.15 billion), Meridin in Senibong, Johor (GDV of RM4.35 billion) and Kota Kinabalu Convention City, Sabah (GDV of RM1.4 billion).

The upcoming launch will be the 6.55-acre Damansara Sentral land with its first phase of the integrated commercial centre, slated to be launched in 4Q this year.

Meanwhile, the group expects to launch its new sales gallery in Singapore on July 8 at TripleOne Sommerset, which will feature the group's projects.

Mah Sing registered a net profit of RM69.5 million for 1QFY13, up 16% from the same quarter last year. Revenue for the quarter declined to RM423.14 million from RM457.78 million previously.

Leong said out of the RM69.5 million net profit the group had achieved, RM67 million was from the property segment while the remaining RM2 million was from the plastics segment.

This article first appeared in The Edge Financial Daily, on June 26, 2013.

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