• 1HFY17 core earnings within expectations

• Core earnings declined

• Achieved RM819m sales in 1HFY17

• Maintain our sales target of RM1.8b for FY17

• Earnings estimate maintained

• Maintain NEUTRAL with TP of RM1.59

1HFY17 core earnings within expectations. Mah Sing Group Berhad (MAHSING)’s 1HFY17 Core Net Income (CNI) of RM181.1m was within expectation as it accounted for 48% of ours and 52% of consensus estimates. As expected, no dividend is announced in the 1HFY17. In our CNI calculation, we have excluded net forex loss and other one off items.

Core earnings declined. 1HFY17 CNI declined 13% yoy to RM181.1m due to higher selling, marketing and administrative expenses. Balance sheet remains healthy with net cash position.

Achieved RM819m sales in 1HFY17. The Company secured RM819m worth of sales in 1HFY17 and this makes up 46% of management and our target of RM1.8b for the full year. We gather that Greater KL contribution to sales is the biggest at 71%.

Maintain our sales target of RM1.8b for FY17. Looking forward, we expect sales to improve in the 2HFY17. Note that the Company plans to launch more in the 2HFY17 and some of the major launches include M Vertica @ Cheras residential suites with built ups from 850 sq ft indicatively priced from RM450,000, M Centura @ Sentul residential suites with built ups from 650 sq ft indicatively priced from RM326,000 and M Aruna (Rawang township’s 2-storey link homes) with built ups from 1,680 sq ft indicatively priced from RM550,000.

Earnings estimate maintained. FY17 earnings estimate is maintained at RM377m. We also maintain our FY18 estimate of RM397m.

Maintain NEUTRAL with TP of RM1.62: Our Target Price is maintained at RM1.62 based on discount to RNAV of 25%. The stock is supported by decent dividend and net cash balance sheet position.

Source: MIDF Research - 29 Aug 2017