MAHSING (8583) : Mah Sing Group - Sales picking up pace
Target RM3.21 (Stock Rating: ADD)
Mah Sing's 9M results were in line with our expectations but above consensus as net profit made up 74% of our full-year forecast and 79% of consensus. It achieved new sales of RM2.45bn, 68% of its full-year target of RM3.6bn. We expect 4Q new sales to be stronger on the back of the conversion of the record bookings achieved in 2H14. Mah Sing has also proposed to undertake a rights issue with free warrants to raise up to RM630m as well as a 1-for-4 bonus. We have tweaked our EPS forecasts for the conversion of ESOS and warrants. We retain our Add call and target basis of parity with RNAV. Mah Sing remains one of our top picks for the sector, with potential re-rating catalysts that include its 1) strong and consistent earnings growth, 2) record sales in the face of tough market conditions, and 3) aggressive landbanking efforts.
9M results in line
3Q results were in line with our forecasts but ahead of consensus. Annualised 9M14 net profit made up 98% of our full-year forecast and 105% of consensus estimates. 9M net profit rose 21% yoy, driven by the progressive recognition of profits from record sales over the past few years. Unbilled sales rose from RM4.79bn in 1H14 to a record RM5.06bn. In line with expectations, Mah Sing did not propose 3Q dividends, as has been its practice.
RM2.45bn new sales
Mah Sing sold RM2.45bn worth of properties in 9M14, up 9% yoy. Some RM1.89bn or 77% of its 9M new sales came from the Klang Valley, RM503m or 21% from Johor, RM42m or 2% from Penang and RM19m or 1% from Sabah. 3Q new sales of RM900m represent a record for the group. But we expect 4Q to be even stronger as Mah Sing enjoyed strong take-up for its Lakeville project in Taman Wahyu, Kuala Lumpur. So far, the group has opened up four blocks of apartments worth RM820m and achieved 85% take-up.
Analyst briefing highlights
Mah Sing hosted an analyst briefing to run through its results and explain the rationale for the corporate exercise to raise funds. Of the RM630m proceeds, RM530m will be used for land and property development activities, RM92m for working capital and RM8m for expenses related to the proposals. We estimate that the rights issue will dilute EPS by 15-16% and RNAV by 3%. This raises FY15/16 fully diluted P/E from 9-10x to a still reasonable 10-11x.
Source: CIMB Daybreak - 21 November 2014
Target RM3.21 (Stock Rating: ADD)
Mah Sing's 9M results were in line with our expectations but above consensus as net profit made up 74% of our full-year forecast and 79% of consensus. It achieved new sales of RM2.45bn, 68% of its full-year target of RM3.6bn. We expect 4Q new sales to be stronger on the back of the conversion of the record bookings achieved in 2H14. Mah Sing has also proposed to undertake a rights issue with free warrants to raise up to RM630m as well as a 1-for-4 bonus. We have tweaked our EPS forecasts for the conversion of ESOS and warrants. We retain our Add call and target basis of parity with RNAV. Mah Sing remains one of our top picks for the sector, with potential re-rating catalysts that include its 1) strong and consistent earnings growth, 2) record sales in the face of tough market conditions, and 3) aggressive landbanking efforts.
9M results in line
3Q results were in line with our forecasts but ahead of consensus. Annualised 9M14 net profit made up 98% of our full-year forecast and 105% of consensus estimates. 9M net profit rose 21% yoy, driven by the progressive recognition of profits from record sales over the past few years. Unbilled sales rose from RM4.79bn in 1H14 to a record RM5.06bn. In line with expectations, Mah Sing did not propose 3Q dividends, as has been its practice.
RM2.45bn new sales
Mah Sing sold RM2.45bn worth of properties in 9M14, up 9% yoy. Some RM1.89bn or 77% of its 9M new sales came from the Klang Valley, RM503m or 21% from Johor, RM42m or 2% from Penang and RM19m or 1% from Sabah. 3Q new sales of RM900m represent a record for the group. But we expect 4Q to be even stronger as Mah Sing enjoyed strong take-up for its Lakeville project in Taman Wahyu, Kuala Lumpur. So far, the group has opened up four blocks of apartments worth RM820m and achieved 85% take-up.
Analyst briefing highlights
Mah Sing hosted an analyst briefing to run through its results and explain the rationale for the corporate exercise to raise funds. Of the RM630m proceeds, RM530m will be used for land and property development activities, RM92m for working capital and RM8m for expenses related to the proposals. We estimate that the rights issue will dilute EPS by 15-16% and RNAV by 3%. This raises FY15/16 fully diluted P/E from 9-10x to a still reasonable 10-11x.
Source: CIMB Daybreak - 21 November 2014
