Gearing to expand overseas

WITH six new projects lined up, Mah Sing Group Bhd is a pure Malaysia play at the moment.

Its chief Tan Sri Leong Hoy Kum tells StarBizWeek he also plans to take the company to a regional and global level within the next five to 10 years.

For a company of its size with a market capitalisation of close to RM2bil it wants to excel at home before spreading its wings overseas.

Leong intends to set his own pace on growing out of Malaysia as the market is still vibrant here.

“Property development is an art, that is why every developer is not equal.”

One of its strategies on going global is building a following of international buyers.

To attract foreign buyers, it has set up an office in Shanghai and it plans to open more sales galleries in Singapore, Jakarta, and eventually London to reach out to a wider audience.

“We have identified several good locations in Singapore and hope to confirm the sales gallery after the Chinese New Year festivities. We are still scouting for good locations in other regions that we mentioned. At the moment, we have a strong network of sales partners to work with in each region,” he says.

Besides sales galleries, the company also participates in various international roadshows to make itself known to foreign buyers and investors. Currently, foreign buyers make up less than 10% of its sales and Mah Sing aims to increase that to 15%-20%. For instance, its projects in Johor have piqued interest of Singaporean, South Korean, Japanese and Indonesian investors.

With the vision of going abroad in mind, he is already thinking of building a team of capable employees.

“There is no point talking about going regional if there are no people to build it. We have to train people to prepare for a bigger market,” he says.

He believes it is important to gain mutual respect in a working environment and, with that, loyalty grows.

The visionary businessman is thinking of setting up “Mah Sing Academy” to achieve that.

“We are very serious about attracting and training the right people for the right portfolio.

“Besides matching the market in salary scale, providing share option schemes and staff discount of our properties, we also provide our staff the opportunities to contribute, learn and grow with on the job and structured training programmes,” he says.

The corporate figure emphasises on forward thinking.

Throughout the interview, he reiterates the importance of proper project planning and financial discipline.

“Buying land is not just about the quantity, we must be able to lock in land that can deliver gross development value (GDV),” he says.

He is constantly on the lookout for opportunities and enjoys looking at land, even on leisure trips.

“You have to be passionate about what you are doing. That's what keeps you going,” he says.

He is considering to increase landbank in Johor, Kota Kinabalu, among others and is “studying” the land in Ipoh and Seremban.

“I am telling you about Johor and Kota Kinabalu (now). In another two years, I might be telling you about my (potential) projects in Ipoh and Seremban. I always like to plan ahead,” he enthuses.

Besides making profit, Leong emphasises on value creation.

He says he is also looking at Seberang Prai to develop good products, which in turn will become a way of “improving the standard of living” there.

“I think Iskandar will be the next Shenzhen,” he says, as he believes that the tightened housing policy in Singapore will shift investors' attention to the region.

CIMB Investment Bank Bhd research head Terence Wong notes in a report that Mah Sing's ability to execute is one of the best in the sector while its earnings prospects remains positive.

When asked if the land acquisition spree would strain the company's cash position, Leong says: “Property is a cashflow game and we have a proven track record of being able to handle multiple projects at the same time.

“Managing 40 projects is a matter of proper project planning and financial discipline. This means that we have to plan when and what to launch immediately.

“As for our landbanking ambitions, we do have the capacity to capitalise on good opportunities. Our gearing of only 0.3 times as at Sept 30 coupled with our cash pile and additional cash coming in from vacant possessions puts us in a good position to gear up for more acquisitions.”

He also notes that the company is very selective of the land it buys and there must be a compelling reason to purchase every piece of land.

“When I choose something, I must know its prospects,” he asserts.

That applies to all its projects. Its two new projects in Johor are Mah Sing i-Parc @Tanjung Pelepas and The Meridin@Medini.

“i-Parc is currently the only sizeable freehold industrial project neighbouring Tanjung Pelepas which is designed to support a significant number of Singaporean companies looking for cost-effective operation hubs,” he says.

It offers detached factories with built-up areas of 10,000 sq ft from RM2.6mil to RM4.3mil, and semi-detached factories with built-up areas of 5,075 sq ft from RM1.6mil and 6,475 sq ft from RM1.6mil and 6,475 sq ft from RM1.8mil for the site which has free zone status.

A believer in balance, he says the Mah Sing's projects are diverse and catered to suit buyers with different needs. Besides the industrial project, it has integrated projects in its pipeline.

The Meridin@Medini is an integrated project in Medini, Iskandar, an area which is 20 minutes away from Singapore via the Second Link.

“This will be a purpose-built development with a live, work, relax, and rejuvenate concept comprising Meridin Suites residences, Meridin Linx small office versatile offices, Meridin Walk lifestyle retail and Meridin Exchange corporate towers,” he adds.

Johor is expected to contribute 20% to the sales for 2013 while some 63% of it will come from projects in Greater Kuala Lumpur and Klang Valley.

One of the key projects this year is Southville City in Bangi, a 420-acre freehold development with a GDV of RM3.63bil. The land along the North South Expressway is also its biggest township thus far.

With 20 education institutions situated in the vicinity, he sees parents who have children studying in the area and investors who can get rental yield from the student market as potential buyers.

“It is not just affordable homes, but affordable homes with style,” he quips, which is in line with the company's vision to be a premier lifestyle developer.

“The current GDV for Southville is RM3.63bil but that could be revised upwards as the size of the land allows us to do a lot of value adding,” he says.

According to Leong, it has received more than 7,000 registrants for the project and would offer one to two-bedroom Savanna Executive Suites from RM208,000 (500 sq ft) and three-bedroom units (975 sq ft) from RM280,000.

“We are also taking registration interest for one and two-storey lifestyle retail shop office (prices starting from RM1.2mil) as well as three-storey Garden superlink homes which are priced from RM760,000 onwards,” he says.

He opines that integrated townships will be very popular in the next few years. One of its top sales contributors in 2012 was M Residence 1, situated in Rawang, a site which is close to 400 acres.

“We believe that M Residence 2 will do well when we launch it this year as many people are still looking for double-storey link homes from RM480,000 in a community with facilities such as clubhouse and 24 hour security,” he says.

In Penang, it has launched the first phase of Ferringhi Residence, the Emaryl Condo villas comprising 20 five-story blocks with only two units per floor. The built up areas range between 1,510 sq ft and 1,752 sq ft, priced from RM870,000.

He says the project has received good response from local and foreign buyers, particularly from Hong Kong and Singapore.

He also expects strong interest in another of its project which is close to the Second Penang Bridge - Southbay City- an integrated project.

“Our Southbay Plaza residential suites priced from RM761,000 for a 1,107 sq ft unit has seen take-ups of close to 90% for Tower A and more than 60% for Tower B. We expect even stronger interest in the project as the Second Bridge is on track for completion this year,” he adds.

It is also launching Sutera Avenue in Kota Kinabalu where it is offering 10-storey shop offices from RM10.8mil complemented by a retail street mall called Festive Avenue Retail and serviced residences.

“Take-up has been excellent as 12 out of the 18 units offered were taken up in a short period of time. Next, we will be offering our retail street mall.”

The retail units have average built-ups of 2,960 sq ft, priced from RM1,280 per sq ft while the serviced apartments will have built-ups from 700 sq ft to 1,200 sq ft, priced from RM800 per sq ft. - The Star