Results

• Within Expectations: Reported 1Q17 PATAMI of RM90.0m (-4.9% yoy), accounting for 24.6% of our and 25.7% of consensus full year forecasts respectively.

Deviation

• None.

Dividends

• None.

Highlights

• QoQ: 1Q17 revenue fell slightly by 2.5% but PATAMI increased by 5.6% due to higher margin of product mix and lower SG&A expenses.

• YoY: Revenue grew marginally by 2.0% mainly due to high progressive billings and additional recognition from Meridin East project in Johor. However, PATAMI fell by 4.9% due to higher SG&A expenses.

• Property sales for 1Q17 achieved RM410m (versus RM380m in 4Q16) in line to meet full year sales target of RM1.8bn . 1Q17 sales were contributed by Greater KL (70%), Johor (13%), Penang (13%) and Sabah (4%).

• Total unbilled sales stood at RM3.5bn as at end of 1Q17, representing 1.3x cover ratio over FY16 property development revenue.

• Upcoming lined up launches in 2017 with estimated GDV of approximately RM1.9bn, and targets 73% of residential sales priced below RM700k.

• Balance sheet remains solid with net gearing at 0.02x (excluding Perpetual Sukuk), which accords Mah Sing room for land banking exercises.

• The company is still actively negotiating a few land acquisitions within Klang Valley to increase its presence, after having recently proposed to acquire a total of 12.6 acres of lands in Titiwangsa and Sentul with an estimated GDV of RM2bn.

Risks

• Slower than expected sales; execution risks for projects.

Forecasts

• Unchanged.

Rating

HOLD ↔

• Healthy balance sheet with low net gearing and consistent dividend yield of 3.9% based on minimum dividend payout ratio of 40%.

Valuation

• Maintain HOLD with unchanged TP of RM1.56 based on unchanged 35% discount on RNAV of RM2.41.

Source: Hong Leong Investment Bank Research - 1 Jun 2017