Mah Sing Group (Mahsing) 1Q23 net profit of RM50.1mn was in line with our and consensus expectations, accounting 26.8% and 29.8% of full year estimates respectively. Net profit rose by 15.9% YoY mainly driven by higher property sales and progressive revenue recognition from ongoing construction progress. Outlook for FY23 will be driven by strong interests for its newly launched properties in the 2023 and solid unbilled sales of approximately RM2.26bn that provides future revenue visibility for more than a year. Maintain a BUY call on the stock at a TP of RM0.81, based on 65% discount to RNAV.

• Within expectations. 1Q23 net profit of RM50.1mn (QoQ: +7.0%, YoY: +15.9%) was in line with our and consensus expectations accounting 26.8% and 29.8% of full year forecast respectively.

• QoQ. Mahsing’s 1QFY23 revenue slightly down by 4.1% QoQ while earnings jumped by 15.9% QoQ, thanks to the improved performance resulting from a significant volume of construction progress and property completions for 2023.

• YoY/ YTD. Top-line and bottom-line increased by 48.5% YoY and 15.9% YoY respectively. The primary drivers of earnings projects include projects like M Vertica located (Cheras), M Arisa (Setapak), M Luna (Kepong), Meridin (East in Johor), M Oscar (Sri Petaling), M Adora (Wangsa Melawati), and Southville City (KL South). Additionally, there were other contributing projects such as M Senyum (Salak Tinggi), M Astra (Setapak), M Aruna and M Panora (Rawang), Southbay City and Ferringhi Residence (Penang), Sierra Perdana (Meridin @ Medini), and Mah Sing i-Parc (Johor).

• Outlook. The Group anticipates further growth in 2023. With the improvement in net gearing to 0.20x, the Group is actively seeking strategic lands in the Klang Valley, Penang, and Johor for the development of residential and industrial properties. In 2023, the company will provide 96% of residential properties priced below RM700,000 and 65% of residential properties priced below RM500,000, which are in high demand within the market. On January 18, 2023, the Group made an announcement regarding the proposed acquisition of 8.2 acres of land in Puchong, specifically M Terra and M Hana. The estimated combined GDV of this proposed development is RM726mn. M Terra, with an indicative starting price from RM250,000, is scheduled to register interest in the second half of 2023. Demonstrating its commitment to sustainability, the Group has become an early adopter of the Centralised Sustainability Intelligence (CSI) platform by Bursa Malaysia in collaboration with the London Stock Exchange Group. Additionally, the Group will collaborate with Alliance Bank Malaysia Berhad to provide various green financing incentives to its suppliers, contractors, and consultants, fostering a more sustainable and resilient business ecosystem.

• Our call. Maintain a BUY call with a TP of RM0.81, based on 65% discount to RNAV.

Source: BIMB Securities Research - 30 May 2023