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Mah Sing Group Bhd (Aug 29, RM1.49)
Maintain neutral with an unchanged target price of RM1.59: Mah Sing Group Bhd’s core net income (CNI) for the cumulative first six months of financial year 2017 (1HFY17) of RM181.1 million was within expectations as it accounted for 48% of our and 52% of consensus estimates. As expected, no dividend was announced in 1HFY17. In our CNI calculation, we have excluded net foreign exchange losses and other one-off items.
1HFY17 CNI declined 13% year-on-year to RM181.1 million due to higher selling, marketing and administrative expenses. Its balance sheet remains healthy with a net cash position. The company secured RM819 million worth of sales in 1HFY17 and this made up 46% of management’s and our target of RM1.8 billion for the full year. We gather that Greater Kuala Lumpur’s contribution to sales was the biggest at 71%.
Looking forward, we expect sales to improve in 2HFY17. Note that the company plans to launch more in 2HFY17 and some of the major launches include M Vertica @ Cheras residential suites with built-ups from 850 sq ft indicatively priced from RM450,000, M Centura @ Sentul residential suites with built-ups from 650 sq ft indicatively priced from RM326,000, and M Aruna (the Rawang township’s double-storey link homes) with built-ups from 1,680 sq ft indicatively priced from RM550,000.
We mantain our FY17 earnings estimate at RM377 million. We also maintain our FY18 earnings estimate of RM397 million. — MIDF Research, Aug 29
This article first appeared in The Edge Financial Daily, on Aug 30, 2017.
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