Mah Sing’s 2QFY13  results  were  in  line  with  expectations.  Its  1HFY13 property  sales  of  MYR1.5bn  are  on  track  to  meet  management’s target of  MYR3bn.  The  company  also  announced  that  it  has  acquired  new landbank  in  Rawang,  with  a  potential  GDV  of  MYR520m,  where  It intends to replicate the success of M Residence 1 & 2. We maintain our NEUTRAL rating on the stock, with a lower MYR2.42 FV. 
 
- In  line.  Mah  Sing’s  2Q13  results  were  within  our  and  market expectations.  

- 1H13 property sales hit MYR1.5bn. 1H13 new property sales surged to MYR1.5bn  from  MYR750m  in  1Q13,  with  the  annualised  sales on  track to meet management’s MYR3bn target. The key projects that contributed to the sales included M City, M Residence 1, Meridin @ Medini and Mah Sing  i-Parc.  In  the  coming  months,  the  company  plans  to  preview  or officially  launch  projects  that  include  Southville  City  in  Bangi,  Lakeville Residence, D’sara Sentral and Loft @ Southbay.

- New land in Rawang. In conjunction with the release of its results, Mah Sing also announced the acquisition of 96.7 acres of land in Rawang for a  purchase  consideration  of  MYR68.7m.  The  higher  land  cost  of MYR16.30  psf  compared  to  M  Residence  1  and 2’s MYR9.36  psf  and MYR6  psf  respectively  could  be  due  to  the  location,  as  the  site  is adjacent to Glomac’s Saujana Rawang township. The new land will be developed into M Residence 3, with a potential GDV of MYR520m.

- Forecasts.  We  make  no  changes  to  our  earnings  forecasts.  Earnings from  the  new  development  will  likely  kick  in  only  from  FY15  onwards, while the company’s near-term earnings will be backed by unbilled sales of MYR3.9bn, up from MYR3.55bn in 1Q13.

- Maintain  NEUTRAL.  We  had  expected  a  moderate  slowdown  in property  sales  as  a  result  of  the  unwinding  of  liquidity  when  we downgraded  the  sector  in  early  July. We  keep  our  NEUTRAL  rating  on Mah  Sing  as  the  regional  economic  outlook  has  turned  increasingly challenging. Despite the incremental value to our RNAV estimate (arising from  the  new  land),  our  fair  value  is  lowered  to  MYR2.42  (from MYR2.75),  based  on  a  larger  15%  discount  (from  5%)  to  RNAV  due  to economic concerns.

Source: RHB