Results

• Within Expectations: MSGB’s FY14 PATAMI of RM339.2m came in within expectations, accounted for 101.8% and 99.6% of ours and consensus’ full year forecasts, respectively.

Dividends

• Declared first and final single-tier dividend of 6.5 sen/share, representing payout and yield of 46% and 3.2%, respectively.

Highlights

• FY14 revenue and operating profit of RM2.9bn and RM432.5m, respectively, showed an impressive 44.7% and 24.9% growth yoy thanks to higher work progress from the group’s ongoing development projects.

• In FY14, Mah Sing achieved property sales of approximately RM3.43bn (vs. launch of RM3.94bn) as a result of its focus on products priced below RM1m mainly in the Klang Valley, which is in line with market demand. For 2015, the group is targeting RM3.43bn worth of sales (flattish yoy), against target launch of RM3.43bn.

• The group also grew its landbank further by 1,134 acres with the 3 proposed acquisitions of new land in Puchong, Seremban and Shah Alam at an estimated GDV of RM19.3bn. Hence, Mah Sing’s undeveloped land bank totaled 3,822 acres.

• Unbilled sales stands at RM5.26bn, representing 2.0x of the group’s FY14 property revenue. Coupled with remaining GDV of RM59.8bn, total RM65.1bn is sufficient to sustain the group for the next 8-10 years.

• New phase of launches for FY15 would be from properties in Southville City, M Residence 2, Lakeville Residence, D’Sara Sentram, Feringghi Residence 2, Meridin Bayvue @ Sierra Perdana and Sutera Avenue.

• Mah Sing’s balance sheet continue to remain strong with net gearing at 0.36x, allowing the group the land acquisition room of another RM300m going forward before hitting the 0.5x net gearing theoretical benchmark.

Risks

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

Forecasts

• Maintained.

Rating

BUY

• MSGB currently trades at 7.3x FY15E P/E vs. its historical 5-year P/E average of 11.1x

Valuation

• TP maintained at RM2.42 (maintain 25% discount to RNAV), which values MSGB at 8.9x FY15E P/E still below its historical 5-year P/E average of 11.1x.
• Maintain BUY.

Source: Hong Leong Investment Bank Research - 17 Feb 2015