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Mah Sing (CIMB Research) buy; target price RM3.30

Reiterate OUTPERFORM recommendation. Mah Sing’s final results met expectations as FY10 net profit matched consensus estimates and was just 2% shy of our forecast. FY10 was an outstanding year as the group sold RM1.55bn worth of properties and bought 10 parcels of land with RM4bn GDV. This year promises to be even better as Mah Sing is eyeing landbank with GDV 2-3x that of 2010 and sales of RM2bn-2.5bn. We maintain our EPS forecasts and RM3.30 target price, based on an unchanged target P/E of 14.5x, in line with our target for the market. Potential re-rating catalysts include 1) newsflow on continued landbanking exercises, 2) sustained strong sales, and 3) accelerating earnings growth. Mah Sing remains our top pick in the property sector.

Finals meet expectations. Full-year net profit came in at RM118m or 98% of our estimate and 100% of consensus forecasts. 4Q net profit rose 25% yoy and 6% qoq on the back of higher contributions from primarily the Klang Valley projects. Unbilled sales rose from RM1.2bn at Sep 10 to RM1.3bn, a record for the group. Mah Sing proposed a first and final dividend of 7.6 sen, slightly below our expectations of 8 sen but 17% above 2009’s 6.5 sen.

2010 sales of RM1.545bn. Mah Sing achieved full-year sales of RM1.55bn, 113% above 2009’s RM727m. This is slightly above its revised target of RM1.5bn and way above its original target of RM1bn. 4Q sales amounted to RM385m vs. RM243m in 3Q and RM112m in 4Q09. On a geographical basis, the Klang Valley made up 86% of sales while Johor and Penang chipped in the remainder. The biggest contributors from the Klang Valley projects were Garden Residence, Perdana Residence 2 and the i-Parc industrial projects. The group is targeting to sell RM2bn-2.5bn worth of properties in 2011, 29-62% higher than 2010.

Landbank acquisition spree. In 2010, Mah Sing acquired 10 plots of land totalling 296 acres with a GDV potential of RM4bn. Recall that in Nov alone, the group bought three parcels of land in Cyberjaya, KL’s Jalan Ampang and more recently, Batu Ferringhi in Penang. The three acquisitions added 101 acres of landbank at a cost of RM324m and boosted the group’s undeveloped and unrecognised GDV by RM2bn to over RM10bn. Mah Sing will continue its aggressive landbanking in 2011 and may acquire landbank with GDV worth 2-3x that of 2010.

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