- Maintain BUY on Mah Sing Group with an unchanged fair value of RM3.60/share, which is at parity to its NAV. Mah Sing delivered 1Q14 net profit of RM84mil (+21% YoY) on the back of RM642mil in turnover (+52% YoY).

- 1Q results were in line, accounting for a quarter of both consensus and our full-year forecasts. Core property development billings surged by 60% YoY. Icon City (PJ), MResidence@Rawang, and M City (Jln. Ampang) were among its top profit contributors.

- Mah Sing achieved new sales of c.RM770mil in 1Q14. About 87% of its planned launches for FY14F are below the RM1mil mark; these are mainly targeted towards the growing middle-income market and first-time buyers.

- Notably, the group secured strong locked-in sales for affordable products such as the Savanna Executive Suites at Southville City@KL South (priced from RM338k onwards) and D’Sara Sentral in Sg.Buloh (SoVos priced from RM380k onwards, and service residences from RM550k).

- About 77% of the residential blocks at D’Sara Sentral have been taken up. The recent preview of residential suites at Lakeville Residence, Taman Wahyu in Kepong (priced from RM529k onwards) have been similarly well-received.

- More importantly, sales momentum should accelerate in the coming quarters as the group starts to crystallise some of its lock-in sales.

- Mah Sing only converted part of the Savanna apartment bookings in 1Q14; the remainder will flow through in 2Q14. The sales of D’sara Sentral residential units will also be included in 2Q (1Q: only commercial units).

- Furthermore, pre-sales trajectory should be lifted by the unveiling of several prolific projects in the coming weeks. The official launch of LakeVille Residences is slated for next month after it previewed two weeks ago. A special preview of the highly-anticipated Avens Residence gardenlink homes (196 units) at SouthVille City will be held tomorrow.

- Mah Sing remains one of our top large cap picks to benefit from an expected return of pent-up demand for Malaysian properties in 2H14 onwards.

- The stock is trading at a deep 41% discount to its NAV despite its solid GDV pipeline of RM31bil and healthy unbilled sales of RM4.6bil. Further NAV upside will likely come from its proposed purchase of a prime piece of KGSSAAS golf course land in Shah Alam for RM327mil (~RM88psf) back in March.

Source: AmeSecurities