MAH SING GROUP BERHAD

Getting Ready for More New Launches Ahead

Mahsing’s 1H23 core net profit of RM100.5mn was in line with ours and consensus expectations, accounting 53.9% and 52.3% of full year estimates respectively. Core net profit rose by 16.6% YoY primarily fuelled by increased property sales and the gradual recognition of revenue from ongoing construction progress. The M Series developments experienced high demand, which greatly contributed to the remarkable sales growth. Outlook for FY23 will be driven by strong interests for its newly launched properties and solid unbilled sales of approximately RM2.34bn that provides future revenue visibility up until 2024. We revised our assumption and earnings forecast higher by 7%/23% for FY23/FY24F. Maintain a BUY call on the stock with a new TP of RM0.85, based on 65% discount to RNAV.

• Within expectations. 1HFY23 core net profit of RM100.5mn (YoY: +16.6%) was in line with ours and consensus expectations accounting 53.9% and 52.3% of full year forecast respectively.

• QoQ. Mahsing’s 2QFY23 revenue slightly increase by 0.1% QoQ while Mahsing’s earnings jumped by 0.8% QoQ, thanks to the improved performance resulting from a significant volume of construction progress and property completions.

• YoY/ YTD. Top-line and bottom-line increased by 32.0% YoY and 16.6% YoY respectively. The primary drivers of earnings for the development projects include M Vertica located in Cheras, M Arisa in Sentul, M Luna situated in Kepong, Meridin East in Johor, M Oscar in Sri Petaling, M Adora in Wangsa Melawati, M Senyum in Salak Tinggi and Southville City in Bangi. Additionally, there were other contributing projects such as Astra in Setapak, M Aruna and M Panora in Rawang, Southbay City and Ferringhi Residence in Penang, Sierra Perdana, Meridin @ Medini, and Mah Sing i-Parc in Johor.

• Outlook. The company anticipates further growth and an enhanced performance for FY 2023. The company maintains a robust balance sheet, with approximately RM929.7mn in cash bank balances, and short-term investments. The completion of projects and the sale of properties have generated free cash flows, resulting in a low net gearing ratio of 0.12x as of the end of June 2023. This strong financial position and liquidity allow for accelerated growth through continued land acquisition. With a solid balance sheet and positive response to the M Series projects, Mahsing plans to pursue additional acquisitions to develop affordable residential homes and expand its industrial development portfolio.

• Forecast. We revised higher our FY23/FY24F earnings forecast by 7%/23% as we increased our sales conversion to revenue attributed to completion of project and higher new launches in the pipeline in FY23/FY24.

• Our call. Maintain a BUY call with a TP of RM0.85, based on 65% discount to RNAV. We continue to like Mahsing due to: (i) strong new launches in the pipeline, ii) strong unbilled sales and (iii) aggressive in land bank replenishment for residential and industrial property.

Source: BIMB Securities Research - 29 Aug 2023