Mah Sing Group Bhd (Mah Sing) has a total remaining GDV (gross development value) of RM24.4bn on 2,286 acres of landbank. 60% of the company’s launches are priced below RM500k while 36% are priced between RM500k-RM700k. Over the past three years, Mah Sing achieved commendable take-up rates for its new launches. BUY with a target price of RM1.11 based on SOP (Sum of Parts) valuations. It's worth noting that Mah Sing has been consistently paying dividends, with a payout ratio of at least 40% from net profit over the past 15 years. Based on our estimates, Mah Sing is expected to pay dividend of 3.6sen and 3.9sen for FY24-FY25 translating into yields of 4.1% and 4.5% respectively. We are optimistic about the prospects of Mah Sing's projects, anticipating positive impacts from upcoming key infrastructure developments, including the JB-Singapore Rapid Transit System, Johor-Singapore Special Economic Zones, and the Penang Transport Master Plan.

Mah Sing has acquired several land banks in 2023 with a combined GDV of about to RM5.5bn. Bulk of these land banks are set for launching in 2024, namely, M Terra, Puchong (high rise); M Tiara, JB (landed); M Zenya, Kepong (high rise); Glengowrie Estate, Semenyih (landed); M Azura, Setapak (high rise); and subsequence phases of existing projects. All in all, the company is planning to launch a total GDV worth RM2.5bn in 2024.

The company’s current projects are well received whereby the M Minori, JB (For Tower A - Int'l Lots); Sensory Residence, Southville City; M Adora, Wangsa Melawati and M Luna, Kepong are fully sold. Other projects such as M Senyum, Salak Tinggi; M Astra, Setapak; M Vertica, Cheras; M Panora, Rawang and Meridin East, JB have achieved average take up rates of more than 90%.

Mah Sing is confident to hit its sales target of RM2.2bn whereby RM1.8bn were already achieved in 9MFY23. Based on management guidance, sales target for 2024 will be higher than total sales in 2023 which will be announced in February. We expect Mah Sing to register net earnings of RM218.0m and RM236.0m for FY24 and FY25 respectively underpinned by strong unbilled sales of RM2.42bn (as of 9MFY23) and higher revenue recognition given the completion of several current projects. The company’s balance sheet is manageable with net gearing of 0.1x as of 9MFY23.

Source: Rakuten Research - 17 Jan 2024

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