KEY INVESTMENT HIGHLIGHTS

• 9MFY24 earnings within expectations
• Earnings lifted by lower cost
• New sales on track
• Earnings forecast maintained
• Maintain BUY with an unchanged TP of RM2.03

9MFY24 earnings within expectations. Mah Sing Group (Mah Sing) 9MFY24 core net income of RM179.7m came in within expectations, making up 75% of our and consensus full year forecast.

Earnings lifted by lower cost. Sequentially, 3QFY24 core net earnings grew to RM63.2m (+5.8%qoq), in line with higher revenue (+10.5%qoq). The higher earnings were due to higher revenue recognition from sale of properties and ongoing projects. On yearly basis, 3QFY24 core net income was higher (+30%yoy) despite flattish topline mainly due to cost savings from finalisation of construction costs for certain construction contracts. The cost savings lifted 9MFY24 core net income higher at RM179.7m (+22.3%yoy) while revenue was lower (- 8.1%yoy) as some of the projects are at initial stages of construction.

Meanwhile, net gearing increased to 0.22x in 3QFY24 from 0.1x in 2QFY24 as Mah Sing increased borrowings mainly for payment of acquisition of 500 acres land in Semenyih which is for development of M Legasi township.

New sales on track. Mah Sing recorded new property sales of RM1.85b in 9MFY24 which is on track to hit management new sales target of RM2.5b for FY24. In 9MFY24, 58% of new sales were contributed by projects in Klang Valley, 41% from projects in Johor. Meanwhile, unbilled sales increased to RM2.77b in 3QFY24 from RM2.43b in 2QFY24, providing one year earnings visibility. Looking forward, new sales momentum should sustain by ongoing projects and new launch namely M Aspira in Taman Desa.

Maintain BUY with an unchanged TP of RM2.03. We maintain our earnings forecast for FY24F/25F/26F. We also maintain our TP for Mah Sing at RM2.03, based on 13% discount to RNAV. We remain positive on new sales outlook for Mah Sing as new sales will be driven by its strategy of selling affordable residential projects. Meanwhile, its JV with Bridge Data Centres at Mah Sing DC Hub @ Southville City will provide upside to earnings growth in the long-term. Hence, we maintain our BUY call on Mah Sing.

Source: MIDF Research - 2 Dec 2024