Mah Sing’s earnings pre-sales to accelerate on pent-up demand
Posted on August 8, 2012, Wednesday
KUCHING: Mah Sing Group Bhd (Mah Sing) is set to capitalise on the imminent return of pent-up residential demand with some 90 per cent of its development projects with total gross development value (GDV) of RM16 billion are at the early stages of their life cycles.
“As such, the annual pre-sales will accelerate, rising from RM2.8 billion this year to RM3.3 billion in our financial year 2013 (FY13) forecasts and reaching RM4 billion in FY14 forecasts,” said AmResearch Sdn Bhd (AmResearch) in its research report.
The research house noted that Mah Sing’s soon-to-be-launched Southville City with GDV of RM2.2 billion in Bangi, which has a direct frontage to the North-South Expressway, was earmarked to be the commercial hub of the southern corridor Klang Valley.
The locality was believed to be significantly underserved despite its strong urbanisation trend as evidenced by several land acquisitions by other developers and surrounding mature townships providing a ready catchment.
Mah Sing’s Rawang township, M Residence had also been rapidly growing in popularity, with demand boosted by the well-tenanted Aeon retail mall.
“Future landbanking would centre more on townships developments.
Several tracts of land, including one or two ‘strategic’ parcels, are currently under negotiations,” said the research house, believing that acquisition newsflow moment would continue in the future.
The company’s earnings delivery appeared intact, said AmResearch who noted that current unbilled sales of RM2.5 billion were already about 1.8 times FY11’s property revenue.
“We forecast earnings to expand by 24 per cent to RM209 million in FY12 forecasts before growing by another 24 per cent to RM260 million FY13 forecast and reaching RM320 million in FY14 forecasts,” said the research house, noting that this was in line with management’s earnings growth target of 20 to 25 per cent per annum.
Backed by a strong balance sheet with net gearing of 33 per cent and its growing pre-sales, management was said to be committed to maintain its generous dividend payout policy of 40 per cent, translating into dividends of about 11 to 15 sen per share over FY12 to FY14.
“Despite its status as the sixth largest property stock by market capitalisation, Mah Sing is very undervalued from both the earnings and assets standpoint,” commented the research house.
AmResearch estimated Mah Sing’s earnings to rise from RM169 million in FY11 to RM209 million in FY12 forecasts, RM260 million in FY13 forecasts and RM320 million in FY14 forecasts, with a three year earnings compound annual growth rate of 24 per cent anchored by in-demand landed residential developments.