This article first appeared in City & Country, The Edge Malaysia Weekly on April 8, 2024 - April 14, 2024

Mah Sing Group Bhd is planning to take its business to the next level through the expansion of its property arm as well as the listing of its plastic and rubber glove manufacturing divisions within the next three years. In an interview with City & Country, founder and group managing director Tan Sri Leong Hoy Kum says he is looking to beef up its property investment portfolio, especially with industrial properties, for additional recurring income.

Currently, assets under this portfolio are mainly retail and residential properties. They include the Star Avenue Lifestyle Mall in Subang Bestari; Icon City in Petaling Jaya; D’sara Sentral in Sungai Buloh; Southville City, including the Cerrado Suites, in Bangi; Garden Plaza in Cyberjaya; M Vertica in Cheras; and Meridin East and Meridin @ Medini in Iskandar Malaysia.

The decision to expand the property investment portfolio resulted in the recent appointments of Datuk Voon Tin Yow as CEO of Mah Sing and ­Leong’s son, Lionel Leong Jihn Haur, as deputy CEO and executive director. This allows 66-year-old Leong to focus on the expansion plans.

The appointments are also part of the group’s succession plan, as having a good management team is important so “the company can still run well even without me around”, says the founder.

One area that Leong is focusing on is industrial properties, where he sees great potential. “To have recurring income, we are looking at data centres. We have suitable land in Bangi and Sepang where there is sufficient electricity supply and green energy. This opportunity is favourable to Mah Sing because of our experience in developing industrial projects.

“We are still looking at the numbers and doing the corporate planning … We want to have a balance between property development and property investment for the long term. Looking at our DNA of being [a quick turnaround company], we cannot wait too long [to execute the expansion plan],” he says.

Other than data centres, Leong is also looking at warehouses as he believes that when investors come to Malaysia, some of them want to be asset-light. This is where Mah Sing comes in, to lease them suitable premises to set up their businesses.

“They [the investors] are strong Fortune 500 companies, which we don’t mind working with. We can invest and sign a long-term lease with them … they can be at our industrial parks, or they can choose a location and we would build according to the specifications that they want,” he says, adding that the group is eyeing industrial sites in Selangor, mainland Penang and Johor.

Better known for its property business, Mah Sing actually started as a plastic manufacturing company. Mah Sing Plastics Industries Sdn Bhd was established on Oct 15, 1979, and is involved in the manufacturing of plastic pallets, plastic boxes, plastic furniture and helmets, with its products exported to more than 50 countries.

Over the last four decades, Leong has accumulated a network of business contacts, which will be useful for the group in the expansion of its property investment portfolio. He has also noticed an influx of foreign manufacturers relocating their operations to the Asean region, and believes that Malaysia’s strategic location in the region, multilingual local talent and growing industrial sector will attract more investors to the country.

As a conscientious entrepreneur, Leong realises that the company needs to change and adapt with the times. “I am always thinking about being ju an si wei (‘be vigilant in times of peace’ in Chinese). We need to think and cannot be so complacent … We have to think of diversification and to adapt [to new trends]. Also, I want to contribute to the economy.”

However, he states that the choice of the product type for the group’s property investment portfolio will change when warranted and other product types will be considered when they are in demand.

It is not just Mah Sing’s property business that will see diversification and expansion. Leong also plans to unlock the value of its plastic and rubber glove manufacturing divisions through an initial public offering (IPO) within the next three years. This corporate exercise will result in the two businesses being parked under a separate entity, while Mah Sing will focus solely on property development and property investment.

“The plastic business is doing well and we expanded our presence to Jakarta recently. We are qualified for an IPO now but we want to expand further first to cover the whole of Asean. The region has a huge population and that’s why I want to focus on it. We need to expand, grow and raise funds, and we see the opportunity now. We are already exporting to 50 countries worldwide and we will continue to tap into Asean countries,” he says.

Mah Sing recently formed a joint venture with its long-time Indonesian partner PT Gaya to expand its business of manufacturing and trading in plastic pallets, containers and related material handling, and storage products in Indonesia.

Leong reckons that the expansion is timely as it addresses the issue of capacity constraints in Malaysian facilities as well as aligns with the rising demand seen in Indonesia and globally. Diversification, he notes, is a must and a strategic move to keep the company growing.

As for Mah Sing’s overall financial performance, Leong is delighted with last year’s results. The company’s revenue stood at RM2.26 billion in FY2023, its highest since 2016.

Also in 2023, the group went on an acquisition spree, purchasing six parcels of land for its M Series developments — M Terra and M Hana in Puchong; M Zenya in Kepong; M Azura in Setapak; M Legasi in Semenyih; and M Tiara in Johor Bahru. Most recently, in January, it acquired 185 acres of industrial land in Sepang with an option to purchase an additional 376.65 acres.

Meanwhile, new phases of M Nova in Kepong, M Panora in Rawang, M Senyum in Salak Tinggi, M Sinar of Southville City in Bangi, and M Minori and Meridin East in Johor Bahru will be unveiled, starting this year.

Leong has set a sales target of RM2.5 billion for 2024, which is supported by launches with a total gross development value of RM2.8 billion. It will continue to focus on its M Series, where houses are mostly priced below RM500,000. As at Jan 31, its unbilled sales stood at RM2.33 billion.

“We have many projects and we are pretty busy. We believe we will do better this year and we continue to look for more land in the Klang Valley, Johor and Penang. For industrial land, we are focusing on Selangor, Johor and Penang’s mainland. We have a healthy cash flow and balance sheet due to our quick turnaround model,” he says.

“This year, we have planned vacant possession funds up to RM500 million and this will generate cash flow for us. I believe [a company’s] gearing cannot be too low, else it means the management is not doing anything and that we didn’t recycle the funds in an efficient manner. We keep our gearing at a maximum of 0.5 times. So far, our gearing is only 0.08 times.

“We have a cash balance of almost RM1 billion and that gives us confidence. Cash is king but we won’t simply buy. We know what we want; we time our launches — some for the medium term, some for the longer term, we need to plan it well. We adapt and innovate our offerings to align with trends and customer preferences to support our business expansion for long-term growth,” says Leong.

The group is also proactively getting ready for its mid-high and high-end product series, which will be launched “when the time is right”. This is timely, especially because the Malaysia My Second Home (MM2H) requirements are being relaxed and more foreigners are expected to come to Malaysia, resulting in an increase in demand for these products, he adds.

For now, Mah Sing has no immediate plan to expand its property business overseas, considering the developer has almost 2,400 acres of land bank in the Klang Valley, Johor and Penang. The tracts are earmarked for mixed-use developments and industrial parks.

Leong says the company will continue to expand its land bank carefully, focusing on strategic land ideal for affordable developments or any potential products that align with market demand.

Also, he believes that as long as the group continues to have the right product at the right price and location, coupled with strong economic growth in the country, the outlook for its business in the property industry is optimistic for the mid- to long-term period.

“The mid- to long-term outlook remains positive, supported by strong fundamental demand for properties due to the young demographic. Demand for houses from first-time homebuyers should remain resilient. The GDP (gross domestic product) growth forecast for Malaysia is expected to be 4% to 5% in 2024. The current employment condition is stable with the unemployment rate at a healthy 3.3% level. Bank Negara Malaysia has maintained the OPR (overnight policy rate) at 3%, which is below the pre-Covid peak at 3.25%,” he says.

“We should see continued strong momentum for our M Series projects that target first-time homebuyers. Our M Series properties with unique product offerings for millennials have a strong following among the young buyers, which is the focus of our development strategy.”

Leong also expects Mah Sing to benefit from several key infrastructure projects in the country, such as the Johor Bahru-Singapore Rapid Transit System; potential revival of the Kuala Lumpur-Singapore high-speed rail; Johor-Singapore special economic and financial zones; Penang Transport Master Plan; as well as the plan for the Pengerang Integrated Petroleum Complex to be designated as a chemical and petrochemical development hub with the provision of special tax incentives to support an ecosystem of high-value activities.

While he reckons that the property industry will still face challenges with rising input costs, he believes that a project’s profit margin would remain intact with disciplined cost control and effective construction management.

“Market sentiments may be affected by the weak currency but our target market [that is, first-time homebuyers who buy to own] is rather resilient as employment conditions remain healthy. Encouraging take-up rates have been seen across all our M Series projects, as evidenced by the healthy growth of our sales performance in recent years,” says Leong.

The company proactively mitigates any potential headwinds with the right positioning of its products, efficient and optimised construction management technology and processes, construction-friendly design, bulk purchase of construction and architectural materials, savings from optimisation of preliminaries, better work scheduling as well as digitalisation and automation of workflows and processes, he adds.

Mah Sing’s growth story is well crafted with the necessary resources and preparations in place. With proper planning and quick execution, the group is set to grow and reach greater heights.

Save by subscribing to us for your print and/or digital copy.

P/S: The Edge is also available on Apple's App Store and Android's Google Play.