PETALING JAYA: Mah Sing Group Bhd is on track to achieve its sales target of RM2bil going by first quarter (1Q) sales, which have already accounted for 23% of the group’s financial year 2022 (FY22) sales target.
“1Q22 new property sales were higher at RM450mil versus RM400mil in 1Q21, making up 23% of its FY22F sales target of RM2bil. We gathered that the group has secured RM873mil bookings in the pipeline as of May 29,” CGS-CIMB Research said in a report on the property group’s 1Q22 results.
By price point, the research firm noted that 60% of its FY22 forecast new sales target will likely come from properties priced below RM500,000 per unit.
At end-March 2022, unbilled sales stood at RM2bil versus RM1.73bil at end-March last year.
“For FY22, Mah Sing plans to launch new projects with a total gross development value of RM2.4bil, including M Senyum (Sepang), M Astra (Setapak), M Nova (Kepong), and M Panora (Rawang). In 1Q22, it launched new projects worth up to RM180mil (versus RM606mil in 1Q21),” said CGS-CIMB, adding that the bulk of the FY22 new launches will be rolled out in the remaining quarters of this year.
However, the company’s management guided for a rise in construction costs of up about 10% in FY22 due to rising building material prices. That said, the research notes that Mah Sing was expecting minimal impact on its margins.
This is because part of the higher cost could be mitigated by product price increases at mature townships or areas.
The company has also adopted e-model project designs for better control of construction sites, progress and sequencing of works, and hopes to derive better cost efficiencies through bulk purchase of building materials.
For the 1Q22, the group reported a core net profit of RM43.2mil, which came in within analysts’ expectations. This was driven by higher property sales and progressive revenue recognition for on-going projects.
However, its manufacturing division slipped into an operating loss of RM7.8mil as compared to an operating profit of RM5.2mil a year ago, mainly attributed to lower absorption of overhead costs during the initial phases of the glove plant’s operation.
Mah Sing started all 12 glove production lines in December last year.
TA Research noted that although the company had obtained the required certification for medical-grade glove sales to the United States, Canada, the European Union, and the eurozone, it understands that “sales volume achieved to date has been negligible”.
“This was due to the fact that major customers, particularly those from the United States, took more time to undertake plant audits.
“Nonetheless, management anticipates that as production increases, plant efficiency and performance will increase, hence reducing per-unit operating expenses and overheads in the future,” said TA Research.
Despite this, the research firm forecasts Mah Sing’s glove manufacturing segment to continue to run at a loss this year due to the low average selling price and weak demand outlook.