• Maintain BUY (TP: 1.11). Mahsing’s FY23 revenue rose by +12.3% YoY to RM2.6bn, in-line with our expectations, accounting for 94% of our full year forecast. The group’s core net profit of RM215.3mn (+19.6% YoY) also met our and consensus expectations, accounting for 108.8% and 91.3%, 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. However, the manufacturing sector saw a marginal 1.4% decline in revenue to RM435.2mn for the FY23, as opposed to RM441.3mn in the previous year's corresponding period. Despite this, operating losses decreased significantly by 78.1% to RM5.0mn, compared to RM23.1mn in the prior year's corresponding period. This notable improvement stems from the Group's concerted efforts in cost management and optimisation measures aimed at enhancing productivity and efficiency in its glove operations. Maintain a BUY call on the stock with a TP of RM1.11, based on a 55% discount to the FY24F RNAV.

• Key Highlight. In 4QFY23, the revenue and core net profit exhibited a marginal and significant change of +0.1% and +38.4% YoY respectively. The company achieved RM2.26bn in new property sales in FY23, marking a 12.3% increase compared to RM2bn (excluding land sales of RM115) in FY22. The unbilled sales position has grown to RM2.33bn, providing future revenue visibility. The company declared a first and final DPS of 4sen. This implies payout ratio of 45% translates to 3.6% dividend yield.

• 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 - 28 Feb 2024