Results

• Within Expectations: MSGB’s 1QFY14 PATAMI of RM98.9m came in within expectations, accounted for 25.4% and 24.6% of ours and consensus’ full year forecasts, respectively.

Dividends

• None.

Highlights

• 1QFY15 revenue and PBT of RM784.1m and RM130.4m, respectively, showed an impressive 22.1% and 16.9% growth yoy, attributable to higher work progress and sales from the group’s ongoing developments.

• In 1QFY15, Mah Sing achieved property sales of approximately RM561m (YTD: RM761m). Key contributors to sales include Southville City@KL South in Bangi, Dsara Sentral in Sg Buloh, Lakeville Residence in Taman Wahyu, and MCity in Jln Ampang. In terms of launches, MSGB launched properties worth of RM638.4m during the quarter under review (4QFY14: RM791m; 1QFY14: ~RM1bn).

• The group’s has remaining total landbank of 3,766 acres (including the MoU for additional land in Puchong of 170.6 acres), with potential GDV of RM59.6bn.

• Unbilled sales stand at RM5.12bn, representing 1.97x 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.

• Among upcoming previews and launched for FY15 are from Southville City, Damansara Sentral, Lakeville Residence, M Residence, Festival Lakecity, Ferringi Residence 2, Icon Residence and Bandar Meridin East.

• The group continues to put its focus on the right market segment, namely mid-range mass market products that are affordably priced. We understand that for FY15, 84% of the group’s planned residential launches are priced below RM1m, with 71% priced below RM700k and 44% priced below RM500k.

• Mah Sing’s balance sheet continue to remain strong with net cash positions, allowing the group ample room for bank borrowings should there be any opportunistic landbanking exercises.

Risks

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

Forecasts

• Maintained.

Rating

BUY

• MSGB currently trades at an undemanding FY15 P/E of 10.5x; healthy balance sheet with net cash position; and attractive dividend yield of 3.8% based on minimum dividend payout of 40%.

Valuation

• TP maintained at RM2.42 (maintain 25% discount to RNAV). Maintain BUY.

Source: Hong Leong Investment Bank Research - 29 May 2015