Results

4Q13 core PAT rose 27.6% yoy to RM70.7m, with YTD net profit of RM280.6m making up 99% and 99% of HLIB and consensus estimates respectively.

Deviations

None

Dividends

8 sen first and final single-tier DPS was declared in 4Q13, bringing YTD DPS to 97% of our 8.25 sen DPS forecast.

Highlights

Stable margins in 3Q. Gross profit margin was fairly stable at 29% in 4Q13, vs. 28% in the previous quarter.

Record unbilled sales of RM4.4bn is 2.6x FY13 revenue and ensures high earnings visibility.

RM3.0bn sales target achieved, with the final quarter raking in RM750m of new sales. Key sales contributors for the year were Meridin@Medini (RM560m), M Residence@ Rawang (RM465m), and Icon City@Petaling Jaya (RM264m). Similar to other developers, MSGB is not committing to a sales target number for FY14.

Active in landbanking. In 2013, MSGB acquired 6 new landbanks with estimated GDV of RM9.35bn, in the hotspots of Klang Valley, Penang, Iskandar Malaysia and Kota Kinabalu, Sabah. This brings its remaining GDV and unbilled sales to approximately RM28.8bn.

Low net gearing. Back in 1Q12, net gearing was 0.41x, but MSGB has successfully brought this down to 0.12x, by securing extended payment terms for its new landbank.

Rolling out key projects. In Klang Valley, Southville City@KL South will be releasing Garden Link Homes (196 units), while the 2 storey link homes in M Residence 3 in Rawang will start to preview in 4Q 2014. In Penang, the focus will be on The Loft@Southbay, featuring 78 units of serviced residences. Over in Iskandar Malaysia, Meridin@Medini is into its second and final phase with the release of affordable small sized commercial units, the Meridin Suites and Meridin Sovo. For its new IDR land in Bandar Meridin East, MSGB will be previewing its landed homes by 2Q 2014. Phase 1 will comprise semi-detached homes priced from RM400k, link homes priced from RM300k and semi-d units priced from RM500k. All in, FY14 launches are collectively worth RM4.0bn and we believe that MSGB will be able to garner healthy takeup rates as we believe it has focused on the optimal product mix for each respective development.

Risks

Slower than expected sales; execution risks for projects; inability to replenish landbank.

Forecasts

After rolling over our numbers, we reduce FY14-15E net profit forecast by 2.4-2.8%.

Rating

HOLD

Given macro and sector headwinds, we are keeping our HOLD call on Mah Sing at this point in time.

Valuation

Maintain TP at RM2.12 (55% discount to RNAV).

Source: Hong Leong Investment Bank Research - 3 Mar 2014