FACULTY OF ECONOMIC & MUAMALAT

STRATEGIC MANAGEMENT
(MGB 4013)

INDIVIDUAL ASSIGNMENT:
MK LAND HOLDING BERHAD



NAME : MUHAMMAD NUH BIN ABU BAKAR
MATRIC NO : 1110826
GROUP : TMB4
LECTURER : DR. UMMI SALWA BT AHMAD BUSTAMAM
DUE DATE : 19 MEI 2014


MK LAND HOLDING BERHAD.
M K Land Holdings Berhad is a Malaysia-based company engaged in investment
holding and the provision of management services. The Company, through its subsidiaries
operates in four segments: property development and related activities, which include the
development of residential and commercial properties and the maintenance of properties;
leisure, which includes the operation of hotels, golf course, resorts and a water theme park;
educational, which includes the provision of educational services, and others, which include
the investment in subsidiaries and property investment. It has 23 subsidiaries, including BML
Management Sdn. Bhd., Bukit Merah Resort Sdn. Bhd., Dominant Star Sdn. Bhd., MK
Development Sdn. Bhd., Prominent Valley Berhad, Saujana Triangle Sdn. Bhd. and
Paramount Innovation Sdn. Bhd., among others.
MK Land, made its debut on the main board of the Kuala Lumpur Stock Exchange
(KLSE) on 27 August 1999 with three (3) major projects injected from EMKAY, namely
Damansara Damai, Taman Bunga Raya and Bukit Merah Laketown Resort. Subsequently on
26 June 2002, six (6) more major projects were injected into MK Lands portfolio from the
EMKAY Group. With this second injection, MK Land has a total of nine (9) projects covering
the States of Selangor, Perak and Kedah.
Today, MK Land is firmly entrenched in the property development industry of being
one of the largest public listed property companies with a paid up capital of RM 1.174 billion.
The Group has a diversified portfolio of projects, which includes affordable housing, lifestyle
living, commercial development, resort, a water theme park and property investment.
MK Land Holdings Berhad is now under the leadership of YBhg. Tan Sri Datuk Haji
Mustapha Kamal bin Abu Bakar. YBhg. Tan Sri Datuk Haji Mustapha Kamal bin Haji Abu Bakar
is the Chief Executive Officer of MK Land since he took over the helm since July 2008. The
Company is an extension from the EMKAY Group, which was formed by Ybhg. Tan Sri Datuk
Haji Mustapha Kamal on 1st March 1983. Since its formation, EMKAY has been involved in
property, construction, commerce, landscaping, resort, agriculture, manufacturing and
education.

Generally, a firms general enviroment includes all of the factors that will influence
directly or indirectly to the firm. Same goes for MK Land, they also will be afffected by any
changes happened due to factors either from outside or inside the control of an organization
or by misappropriate of their management.
THE ISSUE.
As of its financial year endend March 31 2013, MK Land Holdings Bhds net profit in
the third quarter of its financial year rose to RM13.36 million from RM7.61 million in the
same quarter last year. The companys revenue increased to RM135.18 million from
RM87.47 million a year ago. MK Land said its property development segment contributed
RM124.5 million to total revenue
[1]
. However, as at the end of June 30,2013 they had
suffered several financial problems due to unpayment debts. From the reporting, MK Land
has some 2,023ha with a book value of RM1bil, with some 1,214ha of that in Perak. As of
Dec 31, 2012, MK Land had long-term borrowings of RM83.87mil and short-term borrowings
of RM66.52mil. It has cash and cash equivalents of RM105.36mil.
From that, we can see the debts for this company is more bigger than companys
ability to pay back the debts. MK Land also still has some 101acre of undeveloped land in its
flagship Damansara Perdana, where it plans to develop condominium villas, commercial
developments and bungalow lots. From these, we can see that due to lack management and
comprehensive planning of funds, it had give impact to the development of MK Land.
Apart from that, in terms on economic factors the trade of their housing is currently
deficit and causing them to the potential recession. The chairmain, Tan Sri Mustapha Kamal
Abu Bakar said "We have gone through three recessions since we started 28 years ago and
we are still around. The secret is to have a basket of projects"
[2]
.
With changes in legal factor, the implementation of goods and services tax (GST)
from April 2015 announced by Prime Minister Dato Seri Najib Abdul Razak will give a
negative impact on the real estate industry, thus giving the impression of rising house prices,
especially to buyers of affordable housing.

1
Article written on May 29 2013, Business Times.
2
Article written on August 09 2013, business Times.
According to President of Real Estate and Housing Developers' Association Malaysia
(Water Works), Datuk Seri Michael KC Yam said that besides the GST, the increase in house
prices was driven by several factors: the difficulty developers get other employees about
wages and labor shortages
[3]
. He said the GST will result in additional costs for which other
developers are also facing the existing tax stamp duty, real property gains tax, levy on the
Construction Industry Development Board Malaysia (CIDB) and service tax.
Other factors are due to rising prices and shortages of building materials such as
cement, steel bars, sand and bricks. They feel that it was necessary to extend the rating of
zero tax on the primary building material in order to help manage cash flow better.
Meanwhile, a survey report of 150 developers from 12 states in Peninsular Malaysia
including Kuala Lumpur found that the number of housing units for the launch of its second
year in 2013 is decrease compared to the previous corresponding year. The sales
performance also recorded a decrease of 20 percent compared to the first half of 2013.
However local buyers still dominate the real estate market and is for the purpose of
purchasing their own homes.
THE ACTIONS TAKEN.
Therefore, to counter this issue, property developer MK Land Holdings Bhd is
planning to sell some RM200mil to RM300mil worth of land in Perak and the Klang Valley
before the end of its June 30, 2013 financial year to pare down debts and for working capital
purposes
[4]
. From the proceeds, they will use some for debts and some for working capital.
Thus, they also take initiative to build more affordable housing next year to counter
the potential recession. As advertise in newspaper, MK Land Holdings Bhd (MK Land) will
continue the construction of affordable housing, including affordable homes priced below
RM400, 000 per unit
[5]
. MK Land has vast of land that can be developed to build about
114,000 units of various types . When the market is slow , they will focus on the construction
of low and medium cost houses.

3
Article writen on Mac 11 2014, Sinar Harian.
4
Article written on May 25 2013, Business Times.
5
Article written on November 30, Sinar Harian.
The chairman said that affordable housing was particularly saleable during recession
and that the company would concentrate its projects in Selangor, Perak and Kedah. It is
because, nowadays people realise that as the economy growing fast they need to at least
have their own home rather than rent it from someone else. Since their target project
market is in Selangor, Perak and Kedah, for sure the middle-income and above tend to buy
the affordable house with intention either for investment or for their own using.
This will make that MK Land's intention to construct new affordable housing is in line
with the government mission through the 1Malaysia Housing Programme or PR1MA where
the purpose of it is to help peoples own a home, especially in the Klang Valley. To avoid the
GST impact, they want the government to reconsider the proposal to raise the stamp duty to
four percent and three percent maximum rate unchanged as enjoyed the real estate sector
now.
According to Deputy Finance Minister Datuk Ahmad Maslan, he said demand for the
sub-sector is expected to continue until the end of the year, led the launch of more
affordable housing program schemes across the country
[6]
. Therefore, as we can see
Malaysias property market is expected to remain stable this year, with affordable residential
types drivers behind the growth of activity in the market.
It is also can be said that, overall the real estate market is expected to grow
moderately this year due to various measures taken by the government to curb excessive
speculation, which boosted its price. Low interest rates with the base lending rate (BLR) of
commercial banks maintain at 6.53 percent and the weighted average lending rate (ALR) to
5.4 per cent continued to support the domestic property market. The property market also
will increase with the growth of the national economy is expected to grow at a stronger pace
of 5 to 5.5 percent this year.



References.

6
Article written on April 23 2014, Berita Harian.
1. http://www.mkland.com.my/
2. http://www.iproperty.com.my/news/tag/mk-land-holdings-bhd/342
3. http://www.bharian.com.my/bharian/articles/Pasaranhartanahkekalstabil/Art
icle/
4. http://www.bharian.com.my/bharian/articles/6_2PERATUSKDNKSUKUPERTA
MA2014/Article/index_html
5. Annual report MK Land 2013.
6. http://www.sinarharian.com.my/bisnes/gst-bakal-naik-harga-rumah-
1.258915