- We maintain our BUY call on Mah Sing Group with our fair value tweaked slightly downwards to RM3.60/share (at parity to RNAV), as we roll-forward our valuation base to FY14F. Mah Sing had a strong finish for the year, posting a FY13F net profit of RM281mil that surpassed FY12’s earnings by 22% YoY on the back of a 13% YoY jump in revenue.

- Mah Sing declared a first and final DPS (tax-exempt) of 8 sen, translating to a yield of 3.8%. Assuming a similar payout of 40%, we project forward yields of 5%-6% over the next three years.

- The group met its internal sales target of RM3bil for FY13 (FY12: RM2.5bil). Key projects that contributed include The Meridin@Medini, M Residence@Rawang, Icon City, PJ and M City, Jln. Ampang.

- 2013 was also a busy year in terms of landbanking – the group added six more value-accretive land with a combined GDV of RM9.3bil. This bumped up its undeveloped landbank’s GDV to a healthy RM29bil.

- Moving into FY14F, we expect Mah Sing’s pre-sales to accelerate to ~RM4bil from RM3.2bil a year ago. More importantly, 81% of its residential products would be at attractive price points of RM700k and below.

- This would be underpinned by Mah Sing’s exciting pipeline of new launches, i.e. Southville City@KL South and D’sara Sentral which received overwhelming responses for their respective previews.

- Following the strong success of Savanna Executive Suites, Mah Sing is set to roll-out 196 units of Garden Link Homes at Southville City. These 2½-storey units have builtups of 2,650 sq ft at a starting price of RM760k.

- Mah Sing has also just commenced a tender exercise for 2s and 3s shop lots for its Lakeville Residence project in Kepong. The serviced residences (built-ups: 950 sq ft to 1,200 sq ft) would be priced from RM668k onwards (~RM550 psf). Over in Johor, Bandar Meridin East could debut in 2Q14. Phase 1 offers affordable homes prices from RM300k-RM500k.

- Following the completion of its capital raising exercise in 1H13, Mah Sing’s balance sheet remains strong with projected net gearing at 20% for FY14F.

- Hence, we view the stock’s near-term share price weakness as a good time to accumulate a property bellweather ahead of a re-acceleration of property sales. This is backed by solid unbilled sales of RM4.4bil or 2.6x FY13 property revenue, and a robust three-year EPS CAGR of 12%.

Source: AmeSecurities