Mah  Sing’s  1Q14  results  were  in  line  with  expectations.  1Q14  salesstood  at  MYR770m.  Although  the  annualised  number  is  below management’s target of MYR3.6bn, we believe sales will pick up in the upcoming quarters in view of the projects in the pipeline.  We maintain our BUY rating on the stock, at  a  higher FV of  MYR2.50, as we include the incremental value of its recently acquired golf course land.

• Within expectations.  Mah Sing’s 1Q14 results came in within our and market expectations.  The EBIT margin of 17% was lower compared with 20% in the same period last year due to the completion of some projects, and hence the writeback of over-provision  of  costs  in  1Q13.  Net gearing remained  at a  healthy 25%.  As expected, no dividend was declared for the quarter.
• MYR770m new sales in 1Q14.  The company  chalked up  MYR770m in new  sales  in  1Q14  vs  MYR700m  in  4Q13.  Although  this  is  below management’s MYR3.6bn sales target on an annualised basis, the sales value  was  within  our  expectation  and  industry  trend.  This  is  because 4Q13-1Q14  was  a  challenging  period  for  developers  after  cooling measures  were announced, and as such,  Mah Sing also did not launch as  many  projects.  Sales  in  1Q  were  largely  from  Savanna  suites  in Southville (MYR322m), Icon City (MYR121m) and  D’sara Sentral SOVO(MYR116), while the 50% bookings for Lakeville Taman Wahyu and 77% for  D’sara  Sentral  apartments  will  be  gradually  converted  into  sales  in 2Q/3Q. Tomorrow, Mah Sing will preview the first phase of its  2½ and 3-storey garden linked homes with built-up areas of 2,988 and 3,438 sqf in Southville  Bangi,  which  will  be  priced  from  MYR890k-1.2m.  Other upcoming launches are Savanna Block 5 and Sierra Perdana in Johor.
• Forecasts.  We  make  no  changes  to  our  earnings  forecasts.  Unbilled sales continued to rise to MYR4.64bn in 1Q14 from MYR4.4bn in 4Q13.
• Maintain BUY.  We maintain our BUY  call  on the stock.  As we include the incremental value from the recent acquisition of its golf course land in Shah Alam, we raise our FV slightly to MYR2.50 (from MYR2.44), based on an unchanged 15% discount to RNAV.

Source: RHB