- We maintain our BUY call on Mah Sing Group with an unchanged fair value of RM2.12/share. This pegs the stock at a 15% discount to its NAV of RM2.47/share.

- Mah Sing delivered a set of 3Q15 results that was broadly in line with expectations. Net profit rose 5% YoY to RM274mil. For the 9M15 period, revenue rose 13% YoY to RM2.3bil, aided by higher billings from its ongoing projects.

- Key project drivers include M City @ Jln. Ampang, Icon City in Petaling Jaya, Southville City @ KL South, M Residence 2 @ Rawang as well as a bunch of projects in Cyberjaya (i.e. Garden Residence, Clover @ Garden Residence and Garden Plaza).

- But, the group’s pre-tax profit grew by a smaller quantum of 3%. This could be partly due to the timing of project recognition and higher interest expenses (RM5mil in 9M15 vs. RM3mil a year ago) following its perpetual sukuk issuance in March (RM540mil).

- Mah Sing achieved a higher property sales value of RM640mil in 3Q15 vs. RM401mil in 2Q15 (1Q15: RM560mil. This brought 9M15 sales to RM1.6bil – putting the group on track to realise its full year target of RM2.3bil.

- Looking ahead, Mah Sing’s upcoming launches remains focused on the affordable segment – where demand remains relatively resilient.

- Key launches in the pipeline include (i) D’Sara Sentral (fourth block; prices from RM580k/unit); (ii) Lakeville Residence – Taman Wahyu (fifth block; prices from RM595k; (iii) Cerrado serviced apartments at Southville (from RM388k); (iv) M Residence 3 Rawang link homes (from RM593k/unit); and (v) Bandar Meridin East link homes in Pasir Gudang (from RM350k/unit).

- Mah Sing’s balance sheet remains sturdy, with a minimal net gearing of 5% and a solid cash pile of RM1.3bil. This puts the group in good stead to identify fresh landbanking opportunities whenever it arises.

- As at 30 September, the group’s unbilled sales stood at a healthy RM4.8bil or roughly 1.8x its FY14 property revenue.

- Despite its fundamentals being intact, Mah Sing still trades at a steep 42% against its NAV. Backed by a remaining landbank GDV of RM26bil, the stock is therefore a credible play on a recovery in residential property transactions, which could materialise next year.

Source: AmeSecurities Research - 30 Nov 2015