Investment Highlights

• We maintain BUY on Mah Sing Group (Mah Sing) with an unchanged SOP-based fair value (FV) of RM0.98/share and a neutral ESG rating of 3-star (Exhibits 3, 4).

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

• We also maintain our earnings forecast following our recent meet up with Mah Sing’s management. Here are the key takeaways:
  
  (i) We understand that actual sales in 2023 have exceeded the group’s targeted sales of RM2.2bil. Management’s guidance for FY24F will be announced by the end of February 2024. In the meantime, we expect its FY24F sales target to be higher than RM2.2bil in FY23F, driven by new launches in the pipeline and continuous strong demand for its M-series products (Exhibit 1).
  
  (ii) Riding on the vibrant growth of the Johor property market, Mah Sing plans to expand launches in Johor to 32% in 2024 from 21% in 2023 (Exhibit 2). The expansion includes the maiden launch of M Tiara in Lima Kedai and new phases in Meridin East Township in Pasir Gudang.
  
  (iii) Mah Sing is well-prepared to meet the demand for midhigh (RM500K-RM1mil) and high-end (above RM1mil) properties through the upcoming launch of S-series projects. Notably, within the group's landbank, specific projects, such as future parcels of Southville City, Glengowrie Estate (M Legasi), Icon City in Petaling Jaya, and Southbay City, are deemed suitable for mid-high to high-end offerings.
  
  (iv) Despite this, Mah Sing's primary focus remains on its MSeries, catering to the affordable range and industrial segment. The S-series project will be introduced strategically, aligning with market shifts towards the higher-end segment.
  
  (v) To recap, in September 2023, Mah Sing established a joint venture with a Chinese partner, namely The South Sea Capital, to offer one-stop solutions for businesses aiming to establish manufacturing bases in Malaysia. Since the formation of this venture, Mah Sing has actively interacted with potential businesses and the level of interest has been promising.
  
  (vi) Mah Sing has identified an industrial land and is currently in the final stages of completing the land deal. We anticipate the land transaction to be finalised in the near term.
   
• The stock currently trades at a bargain FY24F PE of only 9x vs. a 4-year average of 11x and offers an attractive dividend yield of 4.6%. We believe the mid-to-long-term outlook for Mah Sing remains positive backed by its:
  
  (i) savvy execution and quick turnaround business model; and
  
  (ii) strong focus on affordable properties at strategic locations which have strong demand.

Source: AmInvest Research - 15 Jan 2024