Mah Sing Q1 net profit up 21%

Leong: “The strong sales in the first quarter are contributed by offerings in the right locations.”

Good contribution from strong project work progress

PETALING JAYA: Mah Sing Group Bhd’s first quarter ended March 31 net profit climbed 21% to RM84.02mil on stronger work progress from its ongoing development projects.

Quarterly revenues grew to RM642.2mil from RM423.1mil. Analysts expect sales to pick up in the coming quarters.

Mah Sing said in a statement that it achieved property sales of approximately RM770mil as of March 31, 2014.

“The strong sales in the first quarter are contributed by offerings in the right locations, coupled with good township and mixed development planning, concept and designs in line with market trends,” Mah Sing’s group managing director Tan SriLeong Hoy Kum said.

“About 87% of our planned residential launches for the current year are priced below RM1mil to target demand for mid-range homes from first-time homebuyers and the growing middle-income households,” he added in the statement.

Mah Sing said that strong sales were locked in from affordable high rises such as Savanna Executive Suites at Southville City@KL South, Bangi, and D’sara Sentral in Sungai Buloh.

The preview of Lakeville Residence in Taman Wahyu, Kepong where the residential suites are indicatively priced from RM529,800 also received good response.

The affordable landed link homes in new phases of MResidence 1 and M Residence 2 in Rawang continued to see strong take-up, the company noted.

Mah Sing noted that it had strong earnings visibility, with unbilled sales of approximately RM4.64bil as at March 31, 2014 or 2.7 times the revenue recognised from the property division in 2013.

Meanwhile, RHB Research in a report noted that Mah Sing’s first quarter results were in line with expectations and it believed that sales would see a pick-up in the coming quarters.

RHB maintained its “buy” rating on the stock with a higher fair value of RM2.50 after inclusion of its incremental value of its recently acquired golf course land.

While, KAF-Seagroatt & Campbell Securities said it continued to like the stock for its attractive valuations of 11.2 times FY14 forecast price-to-earnings (PE) and 1.5 times price-to-book (PB) versus the sector’s at 13.7 times FY14F PE and 1.1 times PB that is supported by a 16% return on equity.


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Six bid for EPF subsidiary Kwasa Land’s RM50bil Project MX-1

Kwasa Land, the master developer of the 2,330 acres, is a subsidiary of EPF.

PETALING JAYA: Following Kwasa Land Sdn Bhd’s invitation to 20 prospective companies pre-qualified as tier-1 developers in March, the wholly-owned subsidiary of the Employees Provident Fund has received six submissions for Project MX-1, a town centre in the proposed Kwasa Damansara development.

The entire development has a gross development value of RM50bil.

Kwasa Land, the master developer of the 2,330 acres, said in a statement that the six companies with timely submission bids were Guocoland Malaysia Bhd, Malaysian Resources Corp Bhd, Putrajaya Holdings Sdn Bhd, S P Setia Bhd, UEM Sunrise Bhd and YTL Corp Bhd. These tier-1 developers are large-scale companies with shareholders’ funds or paid-up capital of RM1bil and above.

Kwasa Land said that under the qualitative evaluations, bidders were required to submit development concept and layout proposals for the MX-1 parcel based on approved plot ratio, development phasing, and unique features of the proposal complete with overall planning layout, three-dimensional massing and landscape plans.

Property sales for the whole development within the MX-1 land area should be fully completed within 12 years. Bidders were also required to submit the tender price on a per-sq-ft basis along with their financial feasibility analysis.

The assessment process for MX-1 submissions would be carried out by an independent panel of consultants over two months.

Connected to the township are four expressways, two mass rapid transit stations and the nearby Skypark air terminal.

Kwasa Land is scheduled to invite tier-3 bumiputra developers for the inaugural bumiputra development and tier-2 developers for a residential development by the third and fourth quarters, respectively.

Tier-2 developers are companies with shareholders’ funds or paid-up capital of RM300mil and above, and tier-3 bumiputra companies are those with shareholders’ funds or paid-up capital of RM1mil and above.

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How much will GST impact property prices?

 BY FENNIE LIM

THE predictable announcement by Prime Minister Datuk Seri Najib Tun Razak on Oct 25, 2013 that the Goods and Services Tax (GST) will take effect from April 1, 2015, bundled with several other measures will certainly have an impact on the property market.

Most property developers have started to feel the slowdown in their sales recently and I anticipate that the property market may need at least two years to digest and recover from the various cooling measures that came into effect from this January. After this, I believe that “water will find its own level”.

Nevertheless, the interest in properties by investors is undoubtedly maintained. Apart from the above factors which have caused a pause to investors’ inclination to invest, the other important driving factor is the concern on how GST will impact property prices moving forward.

To understand the effect that GST will have on real estate, it is worthwhile to review the prices of suppliers in the existing supply chain of real estate versus the expected prices moving forward, come April 1, 2015.

It is a given that with the introduction of GST for the first time in Malaysia, there are bound to be uncertainties. Nevertheless, the direction from the Government in treating residential properties as an “exempt supply” and non-residential properties as a “standard rate supply” with GST at 6%, is firm.

As a result, you may be surprised to hear that tax-exempt items such as residential properties will get more expensive even though they fall under exempt supplies.

The reality is that tax-exempt goods are only exempted from GST at the point of sale, that is when residential properties are sold by the developers.

The goods and services which are used by the developers in the making of these tax-exempt goods are not exempt from GST.

For example, residential property is tax-exempt but the materials such as marble, concrete, steel, roof tiles, bricks, sand, cement, wood, electricity and so on are not tax-exempt, which means that developers will almost certainly pass these cost increases to the consumers.

In this regard, I have done a quick simulation on how GST will impact property prices moving forward and have arrived at the following results for non-residential and residential properties.

The following summary of the simulation results is based on three different possible scenarios as follows:
(i) Assuming that the sub-contractor, main contractor as well as the property developer will maintain their original selling prices but will add on a 6% GST to arrive at their final selling price to their customers wherever GST is applicable;

(ii) Assuming that the sub-contractor, main contractor and the property developer will adjust their selling prices according to the actual costs incurred but retain the original profit margin percentage which they used to achieve.

In addition to this, they will add on 6% GST to arrive at the final selling price to their customers wherever GST is applicable; and

(iii) Assuming that the sub-contractor, main contractor as well as the property developer will adjust their selling prices according to the actual costs incurred but retain the actual profit which they used to achieve (as opposed to profit margin in [ii] above).

In addition to this, they will add on 6% GST to arrive at their final selling price to their customers, wherever GST is applicable.

Based on the simulation above, you will note that, with the implementation of GST come April 1, 2015, the estimated final selling price of residential properties as well as non-residential properties will increase accordingly.

However, do note that the above simulation is done with the assumption that all the supply chain entities have the same mind-set when it comes to adjusting their prices according to the scenarios mentioned above. In the event of any party adopting a different approach, the percentage of increase in prices should be changed accordingly.

In a nutshell, given the above GST outcomes for the supply of residential and commercial properties, we can almost be sure that the chances of property prices coming down in the near future should be close to zero.

Hence, will it be worthwhile to invest now rather than later if the opportunities permit?

>> Fennie Lim heads the Crowe Horwath KL Tax Division and has been in the tax profession for the last 22 years. She has a wide range of experience in tax compliance, tax advisory and indirect taxes, and has advised many large local and multinational clients on complex tax engagements.


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Additional condition to housing policy, says deputy minister

(From left) Areca Properties’ General Manager Sales & Marketing Jennifer Chow, Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Michael Yam, Ministry of Urban Wellbeing, Housing and Local Government deputy minister Datuk Halimah Mohamed Sadique and Star Publications (M) Bhd group chief executive officer Datuk Seri Wong Chun Wai visiting Areca Properties’ booth at the StarProperty Fair 2014 launch at Setia City Convention Centre, Selangor.

SHAH ALAM: The Ministry of Urban Wellbeing, Housing and Local Government of Malaysia today announced the “registration on bulk purchases of residential units” as an additional condition in the advertisement and sales permit for housing development at the launch of the StarProperty Fair at the Setia City Convention Centre in Selangor.

“Any developer who sells more than four units of houses to one buyer must register the buyer with the ministry,” said the ministry’s deputy minister Datuk Halimah Mohamed Sadique.

“It is hoped that with these measures, the Government will be able to curb speculative activities, which is one of the main causes of the rapid increase in house prices,” she added commenting on the additional condition that has taken effect immediately.

Since its debut in 2009, the StarProperty Fair has been a platform for developers to showcase an array of medium to high-end property developments ranging from bungalows to condominiums and commercial units.

The launch saw the participation of approximately 30 exhibitors who will showcase their latest property developments to visitors.

Among the participating exhibitors are some of the nation’s top developers such as Mah Sing Group Bhd, Eco World Development Sdn Bhd, Tropicana Corporation Bhd, Sime Darby Property Bhd, OSK Property Holdings Bhd and Gamuda Land Sdn Bhd.

Visitors can also benefit from property investment tips by industry experts and attend talks related to current market and property trends, among others.

The speakers lined-up for the three-day fair are MCT Group of Companies executive director Datuk Danny Goh Meng Keong, Loanstreet managing director Jared Lim, Jiao Tong University lecturer Professor David Koh, Ho Chin Soon Research’s Ishmael Ho, REI Group of Companies chief executive officer Dr Daniele Gambero, Indian feng-shui expert Dr T. Selva, Axis REIT Managers Bhd chief executive officer Datuk George Stewart LaBrooy and Malaysia and Singapore Tax Cases Digest author S. Saravana Kumar.

The fair’s opening launch was also graced by Real Estate and Housing Developers’ Association (Rehda) president Datuk Seri Michael Yam.

StarProperty Fair, which opened today will end on June 1, 2014 and is open to the public from 11am to 7pm.

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(The Edge) Cyberview looks beyond ICT in Cyberjaya’s transformation

SELANGOR: Cyberview Sdn Bhd, a government-owned entity that is the landowner of Cyberjaya, is looking beyond information and communications technology (ICT) in the transformation of the technology-themed city.

According to its managing director Faris Yahaya, the company recently commenced a study on transforming and elevating Cyberjaya into a global technology hub, besides its current focus on ICT.

“We are working closely with various stakeholders, including property developers, on how we can achieve the transformation through various commercial developments,” he said, adding that the government’s mandate for Cyberjaya will go beyond ICT to encompass five focal technology areas.

“The chosen focal areas will have to be unique to ensure that Cyberjaya won’t be in direct competition with other hubs such as the Iskandar Regional Development Authority (IRDA) in Johor,” said Faris.

With the first focal technology area being ICT, the other four focal areas will be determined by June this year, he said.

Faris was speaking at the tenancy agreement signing ceremony between developer D’Pulze Ventures Sdn Bhd and the anchor tenants for D’Pulze Shopping Centre in Cyberview Resort & Spa yesterday.

The shopping centre has a gross development value of RM500 million and sits on a 4.3-acre (1.74ha)land in Cyberjaya. The mall spans over six floors, offering a total of 400,000 sq ft in terms of gross floor area of retail space.

There will also be two blocks of hotel built above D’Pulze Shopping Centre. One block will be managed by Tune Hotels (162 rooms) while the other will be run by Citadines, which is a part of the Ascott Group (203 rooms).

“The construction of the mall is at its final stages and we are 80% tenanted. We expect to open the mall by this August,” said Kan Ah Chun, chairman of D’Pulze Ventures.

The anchor tenants include Tanjung Golden Village (TGV) Cinemas, Jaya Grocer, Factory Outlet Shop, Celebrity Fitness, MPH, Yamaha, U bowl, Song Box, Tune Hotels, Regus and Molly Fantasy

Other retailers which will be moving into D’Pulze are Ace Hardware, Kitchen Shop by Katrin BJ, Akemi Uchi, Royal Sporting House, Adidas, Plan B by the BIG Group, City Chain, The Coffee Bean and Tea Leaf, The Loaf, Rakuzen, Sushi Zanmai, Ole Ole Bali, Homst and Thai Odyssey.

“We have paid very careful attention to our product mix when we planned this development,” said Kan, adding that in a few weeks, the doors to Tune D’Pulze Cyberjaya, the only branded service hotel in the vicinity of Cyberjaya, Putrajaya, Dengkil and Sepang, will be opened.

This will be followed by the opening of Regus Serviced Offices in the next two months, which will offer over 90 workstations. Within the next five months, Citadines will begin its operations.

 

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I-Bhd hopes to triple revenue over next four years

KUALA LUMPUR: I-Bhd, in its bid to triple sales over the next three to four years, yesterday unveiled plans for its Central Tower mixed development, comprising residential serviced suites, a hotel tower and an office tower with a total gross floor area of 1.6 million sq ft. The Central Tower development will be integrated with the adjacent CentralPlaza@i-City shopping mall via pedestrian linkages. Initially, the development of the office and hotel towers and the shopping mall was supposed to be on the same site. With this grander blueprint, the household appliance manufacturer-turned-property developer hopes to generate annual revenue of between RM500 million and RM600 million from its property development segment. “Last year (FY13), we earned only about RM95 million of revenue from our property development segment. To build up [to this target], we need new launches. The challenge is not to find where to build these projects, but to ensure there is constant new launches,” said I-Bhd deputy chairman Datuk Eu Hong Chew at the unveiling ceremony of the project yesterday. These developments will have an estimated gross development value (GDV) of RM1.8 billion, with the towers alone constituting RM1.2 billion. There will be four towers in total after taking into account two residential towers in the first phase of the development, which is slated for completion in 2019. Both Central Tower and CentralPlaza@i-City shopping mall projects will have a joint ground-breaking ceremony. The shopping mall development, in which I-Bhd has a 60% stake, is expected to be completed in 2017. The hotel and office towers at Central Tower were supposed to be a part of CentralPlaza@i-City under the previous plan. However, this changed when Thailand’s largest retail property developer, Central Pattana plc, came into the picture and took a 40% stake. The shopping mall will have one million sq ft of net lettable area. The land where Central Tower will be built was injected by I-Bhd executive chairman Tan Sri Lim Kim Hong as part of the group’s corporate exercise last year. The land was previously parked under Lim’s company The Peak @ KLCC Sdn Bhd. As I-Bhd had ceded its development rights over the mall land in favour of its joint-venture vehicle with Central Pattana, I-Bhd will get a net disposal gain of RM20 million. The cash proceeds will be received over a two-year period, and utilised for I-Bhd’s working capital purposes and partial funding of the development of common infrastructure. Eu said the group expects to derive rental income from its property investment, which he hopes will have an asset value of RM1 billion over the next five years. As at the end of last year, the segment’s revenue was close to RM8 million. “Eventually, the property investment segment will be a big revenue contributor. Once we have RM1 billion worth of property, we will get a sizeable return based on a 5% to 6% yield.” I-Bhd recorded a 161.44% rise in net profit from FY12’s RM16.82 million, while revenue more than doubled from the previous year’s RM66.66 million. Correspondingly, its stock grew 48.06% over the past year, and its price closed at RM3.05 yesterday. This article first appeared in The Edge Financial Daily, on April 16, 2014.

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Flyover to boost sales at RM6.3b Tropicana MetroPark

KUALA LUMPUR: Tropicana Corp Bhd is confident of achieving an 80% take-up rate for Tower B of its Paloma Serviced Residences at its RM6.3 billion Tropicana MetroPark development in Subang Jaya, Selangor, thanks to a proposed dedicated flyover that will link the integrated development to the Federal Highway.

Paloma Serviced Residences has a gross development value (GDV) of RM465 million, comprising two residential towers and 20 villas.

Tropicana group chief executive officer Datuk Yau Kok Seng said the RM106 million flyover was conceived as part of its integrated development masterplan.

“Construction of the proposed flyover will begin in the second quarter of this year and will be completed by the second quarter of 2016,” he told reporters after a signing ceremony and the unveiling of Paloma Serviced Residences show units yesterday.

Up to 70% of the construction cost will be funded via borrowings and the rest by internal funds.

“The building of the new flyover does not involve any acquisition [of land]. It’s a collaboration between us and the Subang Jaya Municipal Council,” Yau said.

Pembinaan Jemerlang Sdn Bhd is the appointed contractor for the proposed flyover.

Tropicana marketing and sales executive director Pam Loh said the average selling price of the 248-unit Tower B Paloma Serviced Residences is RM800 per sq ft.

“We have two towers for Paloma Serviced Residences, but we are only launching Tower B for now. We have already registered a 40% take-up rate for Tower B,” said Loh.

Yau said the remaining components of the Paloma Serviced Residences, featuring  over 300 units of serviced residences for Tower A as well as 20 villas, will be launched at an “appropriate time”.

According to Yau, the first phase of the 88-acre (35.6ha) Tropicana MetroPark development named Pandora Serviced Residences has a GDV of RM365 million and is 90% sold. The project was launched on May 31 last year.

With a total built-up area of over 11 million sq ft, Tropicana MetroPark is divided into nine phases — five residential and four commercial.


This article first appeared in The Edge Financial Daily, on April 16, 2014.



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