INVESTMENT HIGHLIGHTS

• FY17 earnings within expectations

• Earnings driven by projects in Klang Valley

• FY17 new sales at RM1.8b

• Maintain BUY with unchanged TP of RM1.68

FY17 earnings within expectations. Mah Sing Group Berhad (Mah Sing) FY17 core net earnings of RM356.3m is within expectations, making up 95% and 102% of our and consensus full year estimates. Dividend of 6.5sen was announced, translating into attractive dividend yield of 5.4%.

Earnings driven by projects in Klang Valley. Mah Sing FY17 core net income was marginally lower at RM356.3m (-4%yoy) in line with lower topline (-1%yoy) as some development phases in Southville City were at tail end. In FY17, earnings of Mah Sing were mainly underpinned by projects in Greater KL and Klang Valley. Meanwhile, unbilled sales decreased slightly to RM2.7b from RM2.83b in 3QFY17, providing 1 year of earnings visibility.

FY17 new sales at RM1.8b. Mah Sing recorded new property sales of RM547m in 4QFY17, higher than new sales of RM440.7m in 3QFY17. The strong property sales in 4QFY17 were partly driven by launches of M Centura in Sentul. That brought total new sales in FY17 to RM1.8b (FY16: RM1.78b), in line with management and our sales target of RM1.8b. In FY17, 63% of the total new sales were contributed by projects in greater KL, 19% from projects in Johor, 14% from projects in Penang, and remaining 3% from project in Sabah. Looking ahead, management has set new sales target of RM1.8b for FY18 on the back of target launch with GDV of RM2.2b. Launches planned for 1HFY18 include new block of M Centura, new block of M Vertica, Southville City’s new Sensa Residence, M Aruna 2-storey link homes and M-Parc.

Maintain BUY with unchanged TP of RM1.68. We maintain our earnings forecast for FY18. We maintain our TP of RM1.68, based on 20% discount to RNAV. We like the company’s strategy of launching mass-market residential projects in strategic locations. Besides, the healthy balance sheet of Mah Sing will provide opportunities to pursue more land banks.

Source: MIDF Research - 1 Mar 2018