Journey to Wealth
Mah Sing Group Within street, above ours
Period 3Q12 / 9M12
Rating Maintain MARKET PERFORM
Actual vs. Expectations 9M12 net profit of RM175.2m was within street but slightly above our expectations, making up 79% and 83% of street and our FY12E earnings. Results were above ours as billings were more aggressive than ours.
Dividends None as expected.
Key Results Highlights YoY, 9M12 earnings increased 37% given strong sales and billings (Kinrara Residence, Garden Residence, M-Suites, M-City, townships, i-Parc projects, etc.). Property operating margins remained stable at 20%. However, group's pretax margins expanded by 2ppt to 18% due to higher other operating income from Southgate/Icon@Jln Tun Razak rental and higher interest income.
QoQ, 3Q12 pretax profit declined 8% to RM76.1m as last quarter saw closing of certain project accounts resulting in higher revenue.
9M12 sales of RM2.19b are on schedule to meeting FY12E sales targets. Major new launches in 3Q12 were Garden Residence 2, Sutera Avenue and Southbay City; these projects have achieved about 70%-75% take-up rates. We understand there was an en bloc sale included in 3Q12 although the project or quantum was not revealed.
Outlook Acquisition of 412.4ac in Bandar Baru Bangi is still pending Estate Land Board approval, which will likely be in 1Q13. In the meantime, MAHSING is looking for more sizeable landbanks for FY13 and will strive to structure more progressive land payments.
Change to Forecasts Increasing FY12E earnings by 4% but lowering FY13E earnings by 2%. We brought forward some of FY13E billings to FY12E for on-going projects like Kinrara Residence and Icon City as it was more aggressive than anticipated. Unbilled sales are extremely healthy at RM2.95b providing 1.5-2 years visibility.
In line with sector call.
Valuation FD SoP RNAV increases by 3% to RM3.50 due to revisions in certain project's GDV (refer overleaf). Consequently, we raise our TP to RM2.45 when assuming unchanged RNAV discount of 30%.
Risks Unable to meet sales targets. Sector risks, including negative policies.
Source: Kenanga
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