Mah Sing’s 3Q13 results were in line with expectations.  9M13 property sales amounted to MYR2.3bn,  on track to meet  management’s target of MYR3bn. While we expect the sector to take about 3-6 months to adjust to  the  regulatory  changes,  we  believe  the  current  valuations  have largely priced in  the impact. Nevertheless, given the lack of near-term catalysts, we maintain our NEUTRAL call and MYR2.42 FV on the stock.

• In  line.  Mah  Sing’s  3Q13  results  were  within  our  and  market expectations. Overall 9M13  EBIT margin improved to 18.9% from 17.9% in 9M12 due to a better product mix.
• 9M13  property  sales  reached  MYR2.3bn.  Mah  Sing’s  new  property sales  amounted to  MYR2.3bn, up  from  MYR1.5bn  in 1H13,  on track to meet  management’s  MYR3bn  target.  Apart  from  the  ongoing  projects, the recent previews/launches of D’sara Sentral and Savanna Suites are expected to contribute to property sales in 4Q.  On the first day of VIP preview,  the  residential  block  at  D’sara  Sentral  has  seen  a  40-45% booking, largely due to the affordable absolute value of the units (ASP of MYR660 psf with built-up of 800-1,100 sqf). To be prudent, management is  expected  to  strategically  price  its  property  products  going  forward, considering the weaker market sentiment in the short term.
• Memorandum  of  purchase  (MOP)  with  SwhengTee.  Recently,  Mah Sing  has  signed  an  MOP  with  SwhengTee  International  S/B  for  the purchase of Tower B  of Meridin@Medini Ph.2, which  is worth a GDV of MYR172m.  SwhengTee,  which  is  a  real  estate  investors  club,  will undertake  to sell the  322 units in Tower B. We understand that  all the remaining  units  that  SwhengTee  is  not  able  to  sell  after  the  first  three months will only be recognised as sales by Mah Sing. The remaining two blocks in Ph. 2 will be put on the market by Mah Sing before year-end.
• Forecasts.  We make no changes to our earnings forecasts.  Near-term earnings  are  underpinned  by  strong  unbilled  sales  of  MYR4.2bn (MYR3.9bn in 1H13).
• Maintain NEUTRAL. While the market may take a few quarters to digest the  impact  of  the  cooling  measures,  we  believe  the  current  valuations have largely priced in the impact. Nevertheless, given the lack of nearterm catalysts, we maintain our  NEUTRAL  rating on Mah Sing, with an unchanged FV of MYR2.42, based on a 15% discount to RNAV.

Financial Exhibits

SWOT Analysis

Company Profile
Mah  Sing  has  many  projects  across  the  key  states  in  Malaysia.  The  company,  which  adopts  a  fast  turnaround  model  in  property development, has both niche and township projects that underpin its earnings.

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Source: RHB