• Maintain HOLD (TP: 0.87). Mahsing’s 9MFY23 revenue rose by +17.3% YoY to RM1.93bn, in-line with our expectations, accounting for 75.5% of our full year forecast. The group’s core net profit of RM150.5mn (+13% YoY) also met our and consensus expectations, accounting for 75.5% and 76.5%, respectively. The higher revenue and core profit were primarily the result of greater property sales and the gradual recognition of revenue as construction advanced. The key earning contributions from development projects include M Vertica in Cheras, M Arisa in Sentul, M Luna in Kepong, Meridin East in Johor Bahru, M Oscar in Sri Petaling, M Adora in Wangsa Melawati, M Senyum in Salak Tinggi and Southville City in Bangi. Additionally, the manufacturing division saw a significant 61.1% decrease in the company's operating loss, dropping to RM5.4mn from RM14mn in the same period last year. This was due to ongoing efforts to manage costs and optimize operations, specifically aimed at improving the productivity and efficiency of its glove operation. Maintain a Hold call on the stock with a new TP of RM0.87 (RM0.85 previously), based on a 65% discount to the rolled-over FY24F RNAV.

• Key Highlight. In 3QFY23, the revenue and core net profit exhibited a marginally change by -4.0% and +6.3% YoY respectively. Furthermore, on a QoQ basis, there was a minimal change in revenue by +0.01% and -0.9% decline in core net profit to RM644mn and RM50mn, respectively. The company achieved RM1.8bn in new property sales in 9MFY23, marking a 14.4% increase compared to RM1.57bn in 9MFY22, and is on track to surpass 2023 sales target of RM2.2bn. The unbilled sales position has grown to RM2.42bn, providing future revenue visibility. The company declared a first and final single-tier DPS of 3sen. This implies payout ratio of 40%.

• Earnings revision. No earning revision.

• Outlook. We expect Mahsing to maintain its positive earnings through the resilient performance of the M-Series projects. The company will continue to pursue more acquisitions to develop affordable residential homes as well as to expand its industrial development.

Source: BIMB Securities Research - 30 Nov 2023