Mah  Sing’s  4Q14  results  were  in  line  with  expectations.  Maintain NEUTRAL with a lower TP of MYR2.18  (9%  upside), as sentiment on the sector  remains  weak.  FY14  new  sales  hit  MYR3.43bn,  falling  short  of management’s target of MYR3.6bn, mainly due to the longer period to convert bookings into  sales. Sales target for FY15 is set at MYR3.43bn, on the back of MYR3.4bn worth of new launches plus unsold inventory.

Within expectations.  Mah Sing’s  4Q14 results came in within our and market  expectations.  Full  year  net  profit  grew  20.9%,  but EBIT  margin contracted  to  15.6%  from  18.0%  in  FY13.  This  was  attributed  to  the higher selling & marketing expenses for some maiden projects, as well as the completion of a few projects, which resulted in some write-back of over provision of cost last year.  A 6.5 sen  single-tier final dividend, to be paid in September, was declared (vs  4.9 sen in FY13 after adjustment). This is on the basis of post rights and bonus  issue that are expected to be completed in 1Q and 3Q, respectively.

MYR980m  new  sales  in  4Q14.  Mah  Sing  clocked  in  MYR980m  new sales  in  4Q14,  bringing  the  full-year  total  to  MYR3.43bn  (MYR3bn  in FY13). Although this was lower than management’s target of MYR3.6bn, the  amount  is  among  the  highest  in  the  industry.  New  sales  in  FY14 were  mainly  driven  by  a  few  key  projects,  such  as  Southville  Bangi (MYR803m),  Meridin  @  Meidni  (MYR350m),  Lakeville  Residence(MYR408m)  and  an  en-bloc  sale  of  a  5-star  hotel  in  Kota  Kinabalu Convention  City  project  (MYR240m).  Given  the  challenging  market conditions in 2015, management keeps its sales target at MYR3.43bn, on the back of MYR3.4bn worth of new launches plus unsold inventory.Projects  that  will  be  rolled  out  include  Southville  Bangi  (MYR727m), Lakeville  Residence  (MYR427m),  Sierra  Perdana  (MYR280m),  Icon Residence Georgetown (MYR256m). Management also plans to have  a preview for Festival Lakecity, Puchong, and Seremban land in 2H.

Forecasts.  We  make  minimal  changes  to  our  earnings  forecasts. Unbilled sales inched up to MYR5.3bn from MYR5.1bn in 3Q14.

Maintain  NEUTRAL.  Although  the  share price has corrected given the weak  market  sentiment,  we  do  not  see  imminent  sector  re-rating catalyst. We, hence, maintain  NEUTRAL  on Mah Sing, with a lower TP of  MYR2.18  (from MYR2.41), based on a larger 25% discount to RNAV (from 15%).

Source: RHB