Analysts: Mah Sing worth a second look

by **Cals** Mon 17 Mar 2014, 12:40

Business & Markets 2014

Written by Madiha Fuad of theedgemalaysia.com

Monday, 17 March 2014 09:42

KUALA LUMPUR: Mah Sing Group Bhd’s managing director Tan Sri Leong Hoy Kum has set a sales target of RM3.6 billion this year, 20% higher than last year’s.

Leong was quoted by Bernama as saying that the group has projects with gross development value (GDV) of RM4 billion in the pipeline to be launched this year to drive its sales growth.

CIMB Research’s head of research Terence Wong described the 20% growth as a “commendable target given more subdued property market conditions”.

Wong, who has a “add” recommendation on Mah Sing shares, is upbeat about the property group’s constant efforts in expanding its landbank which he believes will provide a catalyst for its share price.

“We are not surprised by the news as Mah Sing has been on a land acquisition spree for many years given its quick turnaround model,” said Wong.

Last week, Mah Sing sealed its land acquisition deal for the year. The group bought a tract measuring 85.43 acres (34.57ha) in Sultan Salahuddin Abdul Aziz Shah Golf Course (KGSAAS) in Shah Alam.

The purchase is viewed positively by investment analysts given its strategic location and fair land price of RM327.4 million, or RM88 per sq ft (psf).

AmResearch’s Hoy Ken Mak highlighted that the KGSAAS land acquisition would bump up Mah Sing’s total remaining landbank to about 2,818 acres with a GDV of about RM31 billion.

He also pointed out that Mah Sing’s purchase price of RM327 million was considered to be fairly attractive when stacked against its future development appeal.

Last Friday Mah Sing shareholders approved the purchase of Pasir Gudang land worth RM411.2 million or RM6.98 psf at an extraordinary general meeting. The 1,352 acres of freehold land named Bandar Meridin East is expected to have an estimated GDV of RM5 billion.

Like other property stocks on Bursa Malaysia, Mah Sing’s share price had retreated quite a fair bit from its height of RM2.70 in May last year to a low of RM2.02 in January this year. It closed at RM2.17 last Friday.

“Investors should continue to accumulate Mah Sing [shares] as they will increasingly become the key proxy for the property sector, underpinned by [the company’s] strong management,” said Wong.

Despite the expectation of a softer property market, Wong forecast Mah Sing’s net profit to expand to RM346 million, or 24 sen per share, for the financial year ending Dec 31, 2014 (FY14), compared with RM280.6 million or 20 sen per share for FY13.

TA Securities’ Thiam Chiann Wen expects the group to rake in new sales of about RM3.2 billion to RM3.8 billion for FY14 to FY16.

The stockbroking house has maintained its “buy” recommendation on Mah Sing, premised on its sizable unbilled sales of RM4.4 billion which provide earnings visibility of close to two years, and its large exposure to the affordable as well as middle-end segments.

This article first appeared in The Edge Financial Daily, on March 17, 2014.