KUALA LUMPUR (Aug 28): Mah Sing Group Bhd net profit nearly halved quarter-on-quarter (q-o-q) to RM15.19 million in the second quarter ended June 30, 2020 (2QFY20) from RM30.07 million in 1QFY20, on the back of weaker revenue and higher finance costs incurred.

This was despite the group halving its selling and marketing expenses and narrowing its administrative expenses, its results filing showed. The latest result was Mah Sing’s weakest since 2006, when it booked a net profit of RM14.89 million on revenue of RM93.23 million.

Despite registering a profit of RM15.19 million in 2QFY20, Mah Sing booked a perpetual securities payout of RM27.22 million — which dragged the earnings attributable to ordinary equity shareholders into the red of RM12.04 million loss. As a result, in 2QFY20, it saw a basic loss per share of 0.5 sen versus a basic earnings per share of 0.48 sen per share in 1QFY20.

Operations-wise, the weaker performance was attributed to the plastic and hotel segments hit by the Movement Control Order (MCO) and a write-off of RM4.5 million for its plastics segment assets due to a fire as well as weaker investment holding segments.

Quarterly revenue fell q-o-q by 19.54% to RM298.62 million from RM371.13 million, on weaker top line contribution across all fronts — property, plastics, hotel and investment holdings.

On a year-on-year basis, Mah Sing’s net profit fell 69.82% from RM50.32 million in 2QFY19. Revenue fell 37.95% from RM481.25 million.

For the six-month period, Mah Sing net profit fell 57.03% to RM45.26 million from RM105.33 million, as revenue declined 28.11% to RM669.75 million from RM931.58 million.

“The MCO and Conditional Movement Control Order (CMCO) periods have generally been challenging for all developers, as site progress of all projects were halted during MCO and there were also delays in loan approvals for sales conversions," said group founder and managing director Tan Sri Leong Hoy Kum in a statement.

“At present, we are focused on converting our RM1.6 billion in sales bookings, clearing the existing stocks and catch up with the construction progress of our projects,” Leong said.

On prospects, Mah Sing has revised their 2020 sales target by 31.25% to RM1.1 billion from RM1.6 billion, in view of a longer period required to convert existing bookings to sales.

It noted that mortgage loan approval rate had contracted to 24.6% in June from 32.6% in May, which offset the jump in loan applications.

For the remainder of 2020, the Group is planning to launch more projects in the affordable segment in Rawang, Cheras, Pulau Pinang and Johor.

As of June 30, the group has a total landbank of 2,005 acres that have remaining gross development value and unbilled sales totalling RM24.64 billion, of which the remaining performance obligation (unsatisfied or partially unsatisfied) was RM1.64 billion.

Separately, Mah Sing said that its plastics manufacturing division is still exploring new expansion opportunities in healthcare-related products, which was first revealed in July – although not much details have been shared with the public.

Shares of Mah Sing closed unchanged at 76 sen, valuing the property group at RM1.85 billion.