- We reaffirm our BUY rating on Mah Sing Group (Mah Sing)
with our fair value unchanged at RM3.60/share, after assigning a 25% discount
to our estimated NAV of RM4.80/share. Our fair value implies a PE of 12x on
FY13F’s earnings.
- Mah Sing is bringing forward its maiden launch for
Southville City in Bangi, albeit with a slight tweak in the development plans.
Mah Sing will kick-off the development with the launch of 1,000 units of
affordable homes by the end of this year. This is targeted for first- time
homebuyers and also young working adults.
- This phase – to be called Savanna – would have a GDV of
RM270mil and will comprise (1) Studio suites – priced from RM208,000, (2) 1-Bedroom (from 268,000), and (3)
2-bedrooms (from RM338,000). We gather margins would remain decent at 15%-20%
despite the attractive prices.
- The release of these units could not have been better
timed. We believe there will be strong response given affordability has been
boosted by the slew of incentives from the Budget 2013 last Friday. The
development is also just 25km away from the city centre.
- Southville City, with direct frontage to the North-South
Expressway, is earmarked to be the commercial hub of the southern corridor
Klang Valley. Thus, we are positive that the maiden launch would provide the
critical mass to ensure the success of the commercial portion.
- This locality is significantly under-served despite its
strong urbanisation trend as evident from several land acquisitions by other
developers and surrounding mature townships providing a ready catchment.
- Mah Sing remains undervalued and currently trades at a
steep 44% discount to its estimated NAV and cheap valuation of 7x FY13F
earnings. Recent sell-offs provide a good opportunity for investors to
accumulate the stock as we expect valuation to gap up – to be driven by
sustained earnings delivery and astute landbanking to drive NAV growth.
Source: AmeSecurities
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