Mah Sing’s strong earnings growth

MAH SING Group Berhad remains one of CIMB Research’s top picks in the property sector for its strong earnings growth and astute management.

The research house, which maintained a buy on Mah Sing at RM1.50, however, lowered its FY08 to FY10 earnings forecast by 2% to 9% to reflect the termination of the Puchong land acquisition at end-March.

It has also revised its target price downwards to RM 2.02 from RM 2.27 previously as the property company’s revised net asset value (RNAV) fell by the same amount due to the removal of the Puchong land from estimates.

Commenting on Mah Sing’s financial results, CIMB Research said the group’s first quarter (1Q) net profit of RM22.3 million amounted to 21% of its full-year estimate as well as consensus, which the research house regarded as in line as future quarters are expected to be stronger.

“Furthermore, the group will be able to recognise contribution from the sale of Icon Tun Razak in 2Q, which will be a big boost to their profits,” noted the research house.

Mah Sing’s 1Q sales amounted to RM113 million, which was 6% above the 1QFY07’s sales of RM109 million.

“It is a commendable performance considering that it has included three weeks of the post general election impact. On a geographical basis, Penang made up 42%, the Klang Valley 40% and Johor 18% of total sales,” it added.

In March, Mah Sing launched the RM380 million Southgate commercial project along Jalan Sungai Besi in Kuala Lumpur (which was revised upwards from RM256 million), while in April it launched the RM1.28 billion Southbay Penang project in Batu Maung.

CIMB Research said Mah Sing was also eyeing more landbank and investors can expect it to speed up its land acquisitions in the second half.

“So far this year, it has acquired only a small parcel of land in Johor to replenish landbank in the Sri Pulai area. The group is eyeing more landbank in Malaysia, including the Klang Valley, Johor and Penang. It has also set its sights on the Sabah market.

“More importantly, it is making significant progress on securing landbank in Vietnam,” it said, adding that Mah Sing was pursuing opportunities in Ho Chi Minh City and Hanoi.

CIMB Research said share price catalysts include more value-enhancing landbank acquisitions domestically and overseas as well as conclusion of en bloc commercial sales and potential further en bloc sales.

Mah Sing rose one sen to RM1.51 at the close of yesterday’s trading.

By The EDGE Malaysia