AmWatch - Mah Sing Group : RM3.6bil sales target intact for 2014; 6 new prolific launches in 2H BUY, 12 Sep 2014

SECTOR FOCUS OF THE DAY

Mah Sing Group : RM3.6bil sales target intact for 2014; 6 new prolific launches in 2H                         BUY

We maintain BUY on Mah Sing Group with an unchanged fair value of RM3.90/share (10% discount to its NAV). We hosted a luncheon with Mah Sing for our key institutional clients.

Management is maintaining its 2014F new sales target of RM3.6bil vs. RM3bil achieved in 2013. The group achieved c.RM1.5bil in sales for 1H14, and excludes another c.RM708mil achieved during the official launch of Lakeville Residence@Taman Wahyu last month. Buying momentum is set to accelerate in 2H14, anchored by six new launches: (i) D’sara Sentral serviced apartments, (ii) Canal Link @ M Residence; (iii) Meridin Bayvue @ Sierra Perdana; (iv) Bandar Meridin East, Pasir Gudang; (v) The Coastal@ Southbay City; and (vi) Feringghi Residence – Precinct 2.

We believe the strong take-up rates for Mah Sing’s launches will be sustained with key focus on the affordable/mid-range segment. Circa 87% of its residential launches for this year will be priced at RM1mil or below. A few of Mah Sing’s recent key launches have registered strong take-up rates. As an example, the official launch of Lakeville Residence in mid-August achieved an 85% take-up rate for the first four tower blocks (1,244 units).

Similarly, demand for the upcoming launches at Southville City@Bangi should improve once the proposed interchange to the North-South Highway takes shape. Starting prices for the latest block (fifth out of eight) of executive suites are 15% or c.RM50k higher compared with earlier launches. Over in Johor, a preview of Bandar Meridin East is scheduled for 4Q14 (targeted launch: 2Q15) for landed homes priced from RM380k.

Year-to-date, the group has snapped new landbank with a combined GDV of RM19bil vs. RM9bil for 2013. This has boosted Mah Sing’s GDV pipeline to c.RM50bil. Despite its aggressive landbanking moves, Mah Sing’s net gearing remains decent at ~0.2x as at 30 June 2014, below its internal threshold of 0.5x.

Others :

Berjaya Food : Already at a justified premium     HOLD

IJM Plantations : Not expanding to Africa for now             HOLD

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