Period  4Q13 / FY13

Actual vs. Expectations FY13 net profit of RM281m was within expectations, making up 99% of street consensus and 102% of our estimates.

 Full year sales of RM3.0b (+20% YoY) were spot on with our forecast and management’s target.

Dividends  Proposed first and final single-tier dividend of 8.0 sen (3.9% yield), which came in slightly below our expected 9.2 sen. However, this is due to the increased share base due to warrants conversion over the year and thus, payout is still consistent with their minimum 40% dividend payout policy.

Key Results Highlights QoQ, although topline grew 6.3% while gross margins were relatively flat at 28.7% (+0.6ppt), net profit of RM70.7m was flattish due to a decline in other operating incomes to RM0.3m from RM8.3m in 3Q13. Positively, net gearing has eased from 0.21x to 0.15x.

 YoY, FY13 earnings rose 22% given higher property billings from M-Suites, M-City, Icon City, Icon Residence, etc., which were backed by strong sales growth and stable gross margins of 30.3% (+0.7ppt).

Outlook  In FY14, the group will be focusing on the affordable/township housing market, particularly in the Klang Valley, which should drive 60% of their new launches for next year. We gather that some 40% of their planned launches will be priced below RM500k/unit, 25% at between RM500-700k/unit while 10% at RM700k-1m/unit, which are digestible prices for urban areas. The remaining launches are mainly hotels (for potential en-bloc sales), offices, shoplots and industrials. While management did not offer an official sales target this time around, they expect to do better than FY13. We are estimating FY14E sales of RM3.3b as we expect property demand to pick up momentum towards mid-CY14 while launches will be more aggressive in 2H14.

Change to Forecasts    No material changes to our estimates post house keeping. Unbilled sales of RM4.4b provide 1.5 years earnings visibility.

Rating Maintain OUTPERFORM

Valuation  No changes to TP of RM2.56 based on 21% discount to FD RNAV of RM3.23.

 We continue to maintain OUTPERFORM on MAHSING due to its increased affordable housing offerings while valuations are trading at a trough level with FY13-14E PER of 9x-8x.

Risks to Our Call

 Unable to meet sales targets or replenish landbank. Sector risks, including additional negative policies.

Source: Kenanga