Mah Sing Group general manager Yeoh Chee Beng and marketing senior manager Christy Leong promoting their Lakeville Residence project in Kuala Lumpur at the StarProperty.my Fair at Tropicana City Mall over the weekend.
KUALA LUMPUR: Macquarie Research is retaining its Outperform rating on property company Mah Sing with a fair value of RM1.72, which is a discount of 30% to its realised net asset value (RNAV) estimate of RM2.45 a share.
It said on Thursday that while the Malaysia property market continues to face challenges in 2016, Mah Sing remains its top pick. It likes Mah Sing’s focus on affordable housing (50% of FY16E launches) in key economic areas, especially the central region.
“We forecast Mah Sing’s FY16E sales at RM2.32bil (+0.9% on-year), with a total revenue of RM3.3bil (+6% on-year). We believe strategic locations of its projects, mostly in the central region, combined with affordable pricing, will boost the company’s overall take-up rates,” it said.
Macquarie Research also said Mah Sing's 4.4% FY16E dividend yield will provide additional support to the share price.
The research house said Mah Sing has a weighted average take-up rate of 90% across its portfolio of 23 development projects, much above the Malaysia average of 63%, as per data by the National Property Information Centre (NAPIC).
The central region projects such as Southville, D’Sara Sentral and Lakeville Residence anchored FY14-15 sales with their total contribution reaching almost 50%. It estimated the Southville project alone will contribute 30% of FY16-18E sales annually. Notably, 64% of Mah Sing’s development projects are in the central region.
“Unbilled sales of RM4.75bil (1.8 times revenue from property development in FY15) will provide a fillip to the company’s earnings for at least the next three years. Mah Sing currently sits on a 2,470-acre land bank portfolio, of which 75% is still at the initial life cycle stage. We believe the company has the right strategy and ammunition to sustain growth going forward,” said the research house.
Macquarie Research revised FY16E/FY17E profit after tax by -10.5%/-11.8%, due to adjustments to its revenue and EBITDA margin assumptions.
It reduced its EBITDA margin due the higher number of launches in the affordable segment.
It also factored in Mah Sing’s new development projects into its RNAV to derive its RM1.72 target price, from RM1.69 previously.
The catalyst is the new infra project announcement such as the Singapore-KL high speed rail could boost Mah Sing’s exposure to the southern region,” said the research house.
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