KEY INVESTMENT HIGHLIGHTS

• 1HFY24 earnings in line
• Earnings helped by cost savings from construction costs
• Robust new sales
• Data centre venture progressing well
• Earnings forecast maintained
• Maintain BUY with an unchanged TP of RM1.97

1HFY24 earnings in line. Mah Sing Group (Mah Sing) 1HFY24 core net income of RM116.4m came in within expectations, making up 49% of our and consensus full year forecast.

Earnings helped by cost savings from construction costs.

Sequentially, 2QFY24 earnings were marginally higher at RM59.8m (+5.5%qoq), in line with higher topline (+3.6%qoq) mainly due to pick up in progress billing of its ongoing projects. On yearly basis, 2QFY24 core net income was higher (+18.8%yoy) despite lower revenue (- 10.2%yoy) as Mah Sing gained cost savings from finalisation of construction costs for construction contracts that are close to completion.

That brought cumulative earnings in 1HFY24 higher at RM116.4m (+16.2%yoy).

Robust new sales. Mah Sing achieved new sales of RM1.66b in 8MFY24, well on track to meet management new sales target of RM2.5b for FY24.

New sales momentum going forward is expected to sustain by pipeline launches which include M Zenya in Kepong, M Azura in Setapak, M Terra in Puchong, M Sinar in Southville City, M Legasi in Semenyih, M Aspira in Taman Desa and M Tiara in Johor Bahru. Meanwhile, unbilled sales of RM2.43b provides earnings visibility of close to one year Data centre venture progressing well. Mah Sing's diversification into data centre is progressing well. Mah Sing launched the 150-acre Mah Sing DC Hub @ Southville City in May 2024 which offering up to 500MW capacity. Mah Sing announced in May 2024 first partnership with Bridge Data Centres for up to 100MW on 17.55acres of land. Meanwhile, Mah Sing is in advanced negotiation for up to 90MW with another DC player for land at Mah Sing DC Hub @ Southville City. Besides, Mah Sing is in negotiation with a DC player for its 42.52 acres of land in Meridin East.

Maintain BUY with an unchanged TP of RM1.97. We maintain our earnings forecast for FY24F/25F/26F. We also maintain our TP for Mah Sing at RM1.97, based on 15% discount to RNAV. We remain positive on Mah Sing as new sales prospect will be supported by strong buying interest on affordable residential projects. Besides, its diversification into data centre will provide recurring income in the long-term. Hence, we maintain our BUY call on Mah Sing.

Source: MIDF Research - 2 Sep 2024