Journey to Wealth

MAH SING - MARKET PERFORM - 29 May 2012

kiasutrader
Publish date: Tue, 29 May 2012, 07:12 PM
kiasutrader
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Period   1Q12

Actual vs. Expectations
1Q12 net profit of RM60m was within expectations, making up 28% of street's FY12E net profit of RM216m and 29% of our RM207m. 

Dividends  No dividend as expected.

Key Results Highlights
YoY, 1Q12 earnings grew 46% on the back of strong sales and billings from its on-going projects (e.g. Kinrara Residence, Garden Residence, M-City, M-Suites, etc) and stable group pretax margins of 18.4%. 

QoQ, 1Q12 bottomline also increased by 46%. However, this was more towards greater recognition of higher margin products like M-City and Kinrara Residence, which boosted group pretax margins by 4.8ppt to 18.4%. 

1Q12 sales of RM676m (+23% YoY) are on schedule to meeting the group and our FY12E sales targets of RM2.5b and RM2.4b, respectively. In fact, Ytd-15 May 2012 sales of RM1.0b also implies that the group is on schedule to meeting its sales (refer overleaf for details). 

Outlook  MAHSING's FY12E sales target of RM2.5b (ours: RM2.4b) will be mainly driven  by  Icon  City@PJ, Kinrara Residence, M City @ Jln Ampang, M Residence @ Rawang, Garden Residence, Icon City, etc. Recent acquisition of Bangi land (a.k.a. Southville City) project earnings is expected to be more significant from FY14 onwards.

Change to Forecasts
No changes to our FY12-13E net profit of RM207m-RM268m. Unbilled sales of RM2.5b provides 1.3 years visibility. 

Rating  MAINTAIN MARKET PERFORM
Our call is a sector driven call due to the unexciting sector dynamics couple with its higher than average net gearing level among developers under our coverage.

Valuation   Maintain TP of RM2.00 based on 42%* discount to our FD SoP RNAV of RM3.42. 

Risks  Unable to meet sales targets; this will be more impactful on developers with higher net gearing. Sector risks, including negative policies.

Source: Kenanga
MAHSING (8583)
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