Investment Highlights

• We maintain BUY on Mah Sing Group (Mah Sing) with anunchanged SOP-based fair value (FV) of RM0.98/share anda neutral ESG rating of 3-star (Exhibits 7 & 8).

• The FV implies a FY24F PE of 11x, at parity to the averageof mid-cap property stocks currently.

• We made no changes to our earnings forecast as Mah Sing’s9MFY23 core net profit (CNP) of RM147mil was withinexpectations, making up 73% of our FY23F earnings and76% of consensus. As a comparison, 9MFY22 accounted for64% of FY22 core net profit.

• YoY, the group’s 9MFY23 revenue rose 17% while CNPsurged 45% YoY. This was mainly driven by strongerproperty topline (+21% YoY), contributed by higher propertysales and revenue recognised for projects underconstruction.

• The operating loss of the manufacturing division wasnarrower at RM5mil in 9MFY23 (vs. an operating loss ofRM14mil in 9MFY22), mainly due to ongoing costoptimisation measures of its glove-making operation.

• In 9MFY23, Mah Sing has secured new sales of RM1.8bil(+7% YoY), attaining 82% of its FY23F sales target ofRM2.2bil (Exhibit 3). The major sales contributors are MAstra (26%), Meridin East (17%), M Vertica (12%) and M Nova(10%).

• Mah Sing launched RM1.5bil (+68% YoY) worth of propertiesin 9MFY23 with a commendable take-up rate ranging from90%-99% (Exhibit 4). Moving forward, Mah Sing plans tolaunch projects with a total GDV of RM629mil-RM1bil in4QFY23 (Exhibit 5).

• Meanwhile, the group’s unbilled sales rose 3% QoQ toRM2.4bil, which represents a cover ratio of 1.1x FY24Fproperty development revenue (Exhibit 3).

• QoQ, Mah Sing’s revenue in 3QFY23 was flattish atRM644mil while CNP expanded 6%. This was largelyattributed to narrower losses from glove-making operation.

Source: AmInvest Research - 30 Nov 2023