Results

• Within Expectations: MSGB’s FY15 PATAMI was flat YoY, accounting for 97% of ours and consensus’ full year forecasts.

Dividends

• Declared dividend of 6.5 sen/share versus our full year forecast of 6.4 sen/share.

Highlights

• In 4QFY15, MSGB achieved new property sales of RM700m (versus RM640m in 3Q15), bringing FY15 sales to RM2.3bn which met its full year sales target. For FY15, MSGB launched RM2bn worth of projects (versus RM4bn in FY14), mainly in Klang Valley (~83%) with the rest in Johor. To note, there was no launching in Penang mainly due to delay in advertising permits and developer licenses (APDL).

• MSGB targets to launch RM2bn worth of projects in FY16 and maintains its sales target of RM2.3bn (flat YoY). MSGB will continue to focus on the mass market with affordable pricing. 70% of planned launches for 2016 are priced below RM700k.

• Upcoming major launches including Cerrado services apartments in SouthVille (from RM388k/unit), Lakeville Residence (from RM595k/unit), MResidences 1,2,3 in Rawang (from RM593k/unit) and Dsara Sental (from RM580k/unit).

• In addition, the total GDV for Southville City has been increased from RM8.3bn to RM11bn given the new direct interchange will free up a parcel of additional land for future development with higher commercial components in the master plan.

Risks

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

Forecasts

• FY16 and FY17 earnings were reduced by 8% and 13% respectively after we lower sales target from RM2.5bn to RM2.3bn in FY16. However, RNAV was increased slightly from RM1.40 to RM1.41 as we incorporated higher potential GDV from RM8.3bn to RM11bn.

Rating

HOLD

• Healthy balance sheet with low net gearing; and attractive dividend yield of 4.9% based on minimum dividend payout of 40%.

Valuation

TP is adjusted slightly from RM1.40 to RM1.41 (maintain 40% discount to RNAV). Maintain HOLD with dividend yield of 4.9%.

Source: Hong Leong Investment Bank Research - 29 Feb 2016