KUALA LUMPUR: Mah Sing Group Bhd is riding high on savvy execution, a quick turnaround business model, and a strong focus on affordable properties at strategic locations with strong demand.
AmInvestment Bank Bhd, in a report, expect an uptick in its FY24 net gearing ratio as a result of finalising payments for several land acquisitions.
In the fourth quarter (Q4) FY23, Mah Sing’s net gearing ratio was low at 0.08x, down from 0.13x in the third quarter (Q3) FY23.
The bank-backed research firm said Mah Sing is currently under negotiations with several parties for potential land acquisitions in Klang Valley, Penang
and Johor for the development of residential and industrial properties.
On earnings, AmInvestment Bank said Mah Sing’s FY23 net profit of RM218 million exceeded expectations.
“The net earnings were 8 per cent above our earlier forecast and 11 per cent above the street’s estimation.
“The variance in our forecast was mainly due to stronger-than-expected contribution from its property development segment.
“Hence, we raise FY24 and FY25 net profit by 7 per cent to account for stronger-than-expected sales from its property development segment,” the research firm said.
Year-on-year (YoY), Mah Sing’s FY23 revenue rose 12 per cent while net profit surged 38 per cent.
The research firm noted that this was mainly driven by a stronger property topline (15 per cent YoY), which was contributed by higher property sales and revenue recognised for projects under construction.
Further, Mah Sing’s operating loss of the manufacturing division was narrower at RM5 million in FY23 compared to an operating loss of RM23 million in FY22, mainly due to ongoing cost optimisation measures of its glove-making operation.
Year-to-date (YTD), Mah Sing has secured new sales of RM2.3 billion (+7 per cent YoY), exceeding its earlier target of RM2.2 billion.
The significant sales contributors are M Astra (23 per cent), Meridin East (18 per cent), M Senyum (11 per cent) and M Vertica (11 per cent).
The research firm also noted that Mah Sing launched RM2 billion worth of properties in FY23 with a commendable take-up rate ranging from 84 per cent to 100 per cent.
For FY24, Mah Sing is setting a higher sales target of at least RM2.5 billion, supported by planned launches of RM2.8 billion.
Meanwhile, the company’s unbilled sales fell 4 per cent quarter-on-quarter (QoQ) to RM2.3 billion, representing a fair cover ratio of 1x FY24 property development revenue.
“We maintain a Buy call on Mah Sing with a higher fair value (FV) of RM1.25 from RM1.06 a share previously based on a 45 per cent discount to our rolled-forward sum-of-the-parts (SOP)-based valuation.
“We made no changes to our neutral 3-star environmental, social and governance (ESG) rating.
“The FV implies a FY25 price-to-earnings (PE) of 11x, at parity to the average of mid-cap property stocks currently,” AmInvestment Bank said.
