PETALING JAYA: Mah Sing Group Bhd has an encouraging booking pipeline of RM772mil and is well on track to meeting its full year sales target of RM1.6bil.
Its nine months 2021 new property sales were stronger year-on-year at RM1.28bil versus RM847mil recorded a year ago. This makes up 80% of its financial year (FY) 2021 sales target of RM1.6bil.
Earnings are expected to be resilient in the fourth quarter backed by normalisation of construction activities as well as gloves contribution, said HLIB Research.
The group turned in RM93mil in net core profit for its nine months in 2021, in line with most analysts’ expectations. For the full year analysts’ consensus for net profit is RM149.3mil.
Beyond 2021, KAF Research said it continues to believe that Mah Sing will have stronger pre-sales recovery in 2022 of about RM2bil or 25% higher than the pre-sales target in 2021.
It said despite not having official launches and a pre-sales target for 2022 as yet, management expects stronger sales and launches in 2022. Strong sales recovery would potentially narrow its discount to its revalued net asset value.
Several analysts are also positive on the property developer’s recent purchase of a parcel of land.
The group announced it was buying 8.09 acres of land in Kepong for RM95mil or RM269.6 per square foot to develop affordable service residences which will have a gross development value (GDV) of RM790mil.
HLIB Research said the new development (M Nova) is expected to mirror the success of M Luna given the similar characteristics of location.
KAF adds that based on the company’s current balance sheet and desirable payment term, it does not expect the land acquisition to be heavy on Mah Sing’s balance sheet
It noted that the group currently has a net gearing of about 30%, with a cash level of RM720mil.
Meanwhile, TA Research said it is overall positive about the proposed acquisition given its strategic location, reasonable acquisition price with land cost to GDV ratio of 12%, and favourable deferred payment terms of 12 months. It is also in is in line with the group’s focus to acquire prime land in the strategic location, especially in the Klang Valley, the research firm added.
It noted that year-to-date the group inked three land deals with a combined GDV of approximately RM2.1bil.
This brings the group’s outstanding GDV to RM23bil.
Its continued land banking this year reflects the group’s optimism about the property sector’s recovery in the coming years, the research firm said.
It added that its 2021’s GDV replenishment has exceeded the group’s 2019 full year landbanking of RM1.6bil by 30%. There was no new land acquisition announced last year.
“We believe Mah Sing is set to meet our and the management’s sales target of RM1.5bil and RM1.6bil, respectively, given that the group has recorded RM1.28bil sales in the nine months of 2021. “This accounted for 85% and 80% of our sales assumptions and management sales target, respectively.
“Looking ahead, new sales are expected to be anchored by conversion of bookings.” TA Research said.