INVESTMENT HIGHLIGHTS

• Visit to M Aruna and IBS facility

• Booking rate for phase one of M Aruna at 63%

• M Aruna adopts IBS precast technology

• Earnings forecast maintained

• Maintain BUY with an unchanged TP of RM1.49

Visit to M Aruna and IBS facility. We had a site visit to M Aruna township and Industrialised Building System (IBS) facility of Mah Sing Group Berhad (Mah Sing) in Rawang recently. Key takeaways from the visit as below:

Booking rate for phase one of M Aruna at 63%. M Aruna is the third project of Mah Sing in Rawang with total GDV of RM520m. Note that M Residence (GDV: RM1b) and M Residence 2 (GDV: RM1.4b) are the first two projects of Mah Sing in Rawang. Mah Sing launched Aster, its first project in M Aruna township in end of September. The project features two-storey link homes measuring 20ft by 60ft and priced from RM550k per unit. We gather booking rate for Aster is encouraging whereby 63% of 117 units have been taken-up within a period of less than two months.

M Aruna adopts IBS precast technology. M Aruna is the first pilot project by Mah Sing that adopts the IBS precast technology. IBS is a construction technique in which components are manufactured in a controlled environment. Subsequently, the components are transported, positioned and assembled into a structure with minimal additional site work. We gather that IBS score of Aster is at 85, which is well above the IBS score requirement of 50 for private projects. Few of the key benefits of IBS are reducing construction time, reducing dependency on foreign workers and increasing quality of buildings. Nevertheless, we gather that Mah Sing has yet to reap cost saving from adoption of IBS as it has yet to achieve economies of scale.

Maintain BUY with an unchanged TP of RM1.49. We make no changes to our earnings forecast. Our TP is unchanged at RM1.49, based on 35% discount to RNAV. We maintain our BUY call on Mah Sing due to attractive valuation of Mah Sing. Mah Sing is trading at 29% discount to its NTA per share of RM1.40. Besides, its dividend yield is attractive, estimated at 6.5% based on dividend forecast of 6.5sen per share.

Source: MIDF Research - 15 Nov 2018