Analysis of Mah Sing Group Berhad

Mah Sing Group Berhad (“Mah Sing“) needs very little introduction. It’s name is synonymous with property development, in Malaysia.

Yet, Mah Sing’s business can be split into two divisions: Property and Plastics.

mah sing

The business


According to its FY 2017 annual report, Mah Sing develops residential properties, commercial properties and industrial properties. It is also focused on integrated developments, where any of the above types of properties are combined, and townships.

Mah Sing’s M Vertica project in Kuala Lumpur, is an example of an integrated development, between residential and retail units. Meanwhile, M Aruna, in Rawang, is an example of a township.

Apart from the Greater Kuala Lumpur and Klang Valley,  Mah Sing also has its footprints in Penang, Johor and Sabah. You may check out all of Mah Sing’s ongoing projects HERE.

In addition to property development, Mah Sing’s other businesses, within the property division, are property management and property investment.

Without a doubt, the property division is Mah Sing’s biggest revenue contributor;  a staggering ~87% of revenue, in FY 2017.


Little known to many, Mah Sing actually started out as a plastic trading company which then branched out into property development. Now, Mah Sing also manufactures plastic goods such as pallets, containers, furniture (plastic chairs and tables), motorcycle helmets and others.

Another company that comes to mind, because of its relation between plastics and property development, is Scientex Berhad, although Scientex Berhad manufactures plastic packaging.

Mah Sing’s plastics division contributes about 10%, in terms of revenue, in FY 2017.

DATA 2017 2016 2015 2014 2013
REVENUE (RM’000) 2915791 2957617 3108506 2904723 2,005,596
OPERATING PROFIT (RM’000) 476545 499963 453449 368748 307728
PROFIT TO SHAREHOLDERS (RM’000) 361895 361357 386677 339249 280616
SHAREHOLDERS’ EQUITY (RM’000) 3455968 3288111 3135622 2268629 1952292
DEBT (RM’000) 3677790 2924028 3471583 3027675 2620472


DEBT TO EQUITY RATIO 1.07 0.89 1.11 1.34 1.34
OCF RATIO 0.21 0.30 -0.13 0.20 0.03
OPERATING PROFIT MARGIN (%) 16.34 16.90 14.60 12.69 15.34
PROFIT MARGIN (%) 12.32 12.18 12.37 12.22 13.92
EPS (CENTS) 12.54 13.47 15.73 18.35 21.52
EPS (ADJUSTED) CENTS 14.91 14.88 15.93 14.68 11.56
DPS CENTS 6.50 6.50 6.50 6.50 8.00
DIVIDEND PAY OUT (%) 52.75 48.26 41.32 35.42 37.17
P/E 9.17 10.62 9.22 9.17 10.50
ROE (%) 10.52 9.90 12.10 15.90 15.59

Note: Financial data may vary depending on sources.

From the table above, my valid concern is the stagnated revenue growth. In fact, revenue has dipped slightly over the last couple of years. This may be inevitable due to the weakening local property market since FY2015. It should be noted that 2015 was the year when GST was introduced.

Despite the stagnated revenue growth, operating profit margin has been improving since FY 2015. This could be the doings of a cost conscious management; which is always welcomed. Profit margin has been very stable between the 12% and 13% throughout the years in review.

Mah Sing has also been constantly paying solid dividends, for over a decade. Recently, it has been paying dividends of least 6.5 cents per share.


Mah Sing has a substantial land bank of 2,125 acres with a potential gross development value of RM27.6 billion. This is sufficient to sustain revenue and earnings growth for another 8 years.

Hit by the property slump in 2016 and 2017, Mah Sing launched its “Reinvent Affordability” campaign, in October 2017, which entails  projects where residential units are sold under RM500,000.00. M Vertica (Cheras), M Centura (Sentul), M Vista (Penang) and Meridin East (Johor) are brainchildren of the Reinvent Affordability campaign. This is Mah Sing’s attempt to reinvigorate stagnated property sales over the recent years by targeting new home buyers, who consist of young adults. Indeed this has paid off as Mah Sing has overwhelming positive reception from the Reinvent Affordability campaign especially for M Vertica.

Although this is much a speculation on my behalf, I believe that with the anticipated removal of GST, by the PH government, young adults, in general, will have a higher disposable income to purchase homes. This would  drive up demand for housing, albeit slowly. Further, I also expect that the eventual repeal of GST will reduce Mah Sing’s construction cost because input building materials and services will no longer bear GST themselves.


Property slow-down is a risk that is still lingering the property development industry. There are many opinions regarding the slow down. My offhand observation is that there is an oversupply of housing but inadequate demand for it, due to affordability issues.

Interest rate risk is a latent risk which affects the economy, including the property market. The property market usually slows down when interest rate is high because potential homeowners have the tendency to be put off by higher repayment costs on their mortgages. In addition, a higher interest rate would affect Mah Sing’s borrowing costs, which are quite substantial.


Mah Sing is an experienced property developer with good financials. Being able to increase its operating profits despite a lacklustre property market is, in itself, a commendable achievement. At the time of writing, its share price of RM1.10 is a far cry from its share price of RM1.50, at the end of 2017. Value has indeed emerged.

Further, Mah Sing has been constantly paying a dividend of 6.5 cents, including for FY2017, which will ex on 12.09.2018, making it very attractive to dividend investors at its current price of RM1.10 because this equates to a dividend yield of 5.9%.

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This analysis is published for your casual and leisurely reading and is not a recommendation to buy, sell or hold shares and must not be relied upon as a financial advice. You are encouraged to seek your own financial advice.

  1. FY 2017 Annual Report



Is shares buyback a good thing?

You may have heard of shares buyback but clueless as to what it does. A shares buyback is for all intents and purposes, the purchase of shares of a company, by the said company. To achieve that, a company repurchases its own shares from, in most cases, the open market.

Photo by Tim Gouw on
What are the effects of a shares buyback?

Every company listed on a stock exchange has a certain number of outstanding shares which are in circulation. When a company repurchases its own shares, it does so with the intent of taking those shares out of circulation. That means, shares are purchased and parked in the treasury of the company. When shares are taken out of circulation, there are lesser numbers of outstanding shares. This makes each outstanding shares more valuable.

Fabled fund manager, Peter Lynch, in his book, One up on Wall Street, approves of shares buyback and has this to say:

“When stock is bought in by the company, it is taken out of circulation, therefore shrinking the number of outstanding shares. This can have a magical effect on earnings per share, which in turn has a magical effect on the stock price. If a company buys back half its shares and its overall earnings stay the same, the earnings per share have just doubled. Few companies could get that kind of result by cutting costs or selling more widgets.”

To illustrate, Company X has 100 outstanding shares and made RM10,000.00 in profits, in a particular year. That equates to an earnings per share (EPS) of RM100.00. However, Company X embarked on its shares buyback programme and repurchased 50 outstanding shares. Hence, there are only 50 outstanding shares left and each share is more valuable because each share has an EPS of RM200.00 (instead of an EPS of RM100.00).

Shares buyback and payment of dividend are perceived as fulfilling the same agenda, i.e. rewarding shareholders. Dividend payment disburses a portion of the profit of the company to shareholders, and is tangible. On the other hand, share buyback is rather an intangible reward to shareholders because its aim is to increase the “value” of your shareholding, making it more “valuable”.

As for me, I’d rather have my dividends, unless I can have both.

What are the criteria for shares buyback?

Firstly, for a company to embark on a shares buyback program, it must first have the means to do so i.e. ample cash lying around. This is because cash is obviously required to purchase shares in the open market. This can be interpreted as a good indication that a company has a good cash reserve to buyback its shares unless that means is supported from borrowings (which is never a good thing). Apple recently took advantage of the preferable taxation cuts to repatriate cash which is stored away, from the USA, to buyback $100 billion worth of stocks. Obviously, it has a stockpile of money to burn.

Secondly, it must satisfy itself that it has no immediate use for the cash which may generate more value than shares buyback. For example, if a company had the resources to expand its production or to diversify into another business, where great wealth can be made, it should utilise those resources, as capital for that venture, instead of buying back shares.

Lastly, shares buyback must be done when share prices are reasonable and that the company should never overpay for the shares repurchased. A company may choose to repurchase shares especially when share prices are low – a plan which is adopted/proposed to be adopted by Malakoff, MYEG and George Kent.

On top of shares buyback, Malakoff is also offering a generous dividends, which for me, is a great bonus.


Shares buyback is also a good indication to gauge the performance of a company’s managerial decisions. If shares buyback is initiated at a wrong time or for a wrong purpose, it is very likely that management decisions are impacted for an ulterior or incompetent reason which may be detrimental.

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