• Mah Sing’s earnings came in-line with ours and consensus estimates. Its 9M16 net profit is flattish with a growth of 1.2% yoy in tandem with softer market sentiment.

• The group revised down its 2016 full year sales target from RM2.3bn to RM1.8bn. Based on latest revision, total sales achieved as of 9M16 was 77%.

• Group to focus on housing with affordable pricing point to boost sales.

• Expecting dividend payout of at least 40% of net profit or DPS of 6.6 sen. This translates into a decent yield of 4.3%.

Meridin East in Iskandar aiding group’s sales. Johor region saw its sales ballooned by >100% for 9M16 yoy. This commendable performance is attributed to the pick up in Meridin East which contributed 50% of the region’s total sales of RM325.1m (9M15 : RM132.1m). Klang Valley region still leads in total sales contribution, although sales are down by 30% YTD.

Weaker sales in the property segment. For 9M16 under review, the segment registered total sales of RM1.4bn, down by 12.5% in comparison with 9M15’s of RM1.6bn. We are not surprised with the subdued sales as the group slowed down new launches to only RM981m for 9M16 versus 9M15 launches of RM1.45bn. The slowdown is seen across the property sector since 1H15.

We upgrade to BUY with TP of RM2.03 (previous TP:RM1.66) as we rolled over our valuation to FY17E. The TP is derived from a blended valuation of PER and PBV of 10.8x and 1.6x respectively. We believe its rising earnings could sustain dividend yield at a decent level of 4.3%-4.6% in 2016-2017.

Source: BIMB Securities Research - 28 Nov 2016