Mah Sing Group - Strong set of numbers again BUY

- Mah Sing reported a net profit of RM55.4mil for the final quarter, bringing its FY12 earnings at a strong RM231mil (+37% YoY) which outperformed our and street’s estimates by 5%. This is on the back of a 13% jump in turnover.

- The group declared dividends of 7.5 sen/share (DPS:11 sen for FY11) which translates into payout ratio of 44%.

- Earnings for the year were largely driven by progress billings from:- (1) Kinrara Residence, (2) Garden Residence, (3) MResidence, (4) Southgate Commercial Centre, (5) StarParc Point, among others.

- On the other hand, earnings were flat QoQ at RM55mil given a slight margin compression to 16% from 18% in the preceding quarter. This was due to higher sales and marketing expenses in light of new launches recently.

- For the year, the group managed to achieve its sales target of RM2.5bil which was largely driven by:- (1) Kinrara Residence – RM451mil, (2) MCity, Ampang – RM416mil (3) Clover@Garden Residence – RM313mil, and (4) MResidence, Rawang – RM174mil.

- Going forward, Mah Sing aims to launch RM3.7bil worth of properties with a sales target of RM3bil. We believe this is achievable given the exciting projects in the pipeline. These include Southville City in Bangi which has received an overwhelming response – with over 8,000 registrants for the affordable suites.

- Meanwhile, there has been a slight change in plans for the maiden landed units. The group will now launch super-link homes at a starting price of RM760k with a build up of 3000sf. We also believe Meridin@ Medini would see strong take-up rates given its strategic location within Iskandar Malaysia.

- Mah Sing’s earnings are very much secured with strong unbilled sales of RM3.2bil, which is double that of FY12’s property turnover.

- Mah Sing is currently trading at a steep 54% discount to its FD NAV estimate of RM4.80/share. While we are optimistic Mah Sing would be able to achieve the ambitious FY13F sales target of RM3bil on the back this solid set of numbers, we nonetheless expect its share price to trade sideways due to weak sentiment for property counters amid election risks.

Source: AmeSecurities