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Maybank IB Research - Company Update: 23 April 2010

altNiche development at KLCC-area

Another quick turnaround project. Mah Sing (MSGB) is acquiring a 1.4-acre freehold commercial land along Jalan Ampang for RM54m. It plans to develop affordable small-sized serviced residences with GDV of RM257m, lifting total GDV and unbilled sales to RM6.2b (+4%). We expect a strong take-up for the project given the scarcity of similar developments. Maintain Buy with an ex-bonus TP of RM2.20.

Acquiring freehold commercial land. The 1.4-acre land along Jalan Ampang (next to Great Eastern Mall, and close to Gleneagles hospital) will be acquired from F&N for RM54m or RM857psf. The purchase price is 4% lower than the price transacted (RM889psf) between F&N (vendor) and an independent third-party (buyer) in Jun ‘08, but this was subsequently rescinded in Nov ’08 due to the government’s partial compulsory acquisition (0.4% of total land size).

RM257m GDV planned. The land will be developed into serviced residences, named [email protected] Ampang. GDV is estimated at RM257m (over 3 years), with a small built-up area of 430-1,150 sq ft per unit valued at RM350,000 onwards (RM814psf). A quick turnaround is expected for the land with its maiden launch in 2H10 as it already has a development order. Assuming a 20% pretax margin, it will add RM13m in annual net profits (2sen EPS) over 3 years, and 4sen to our RNAV estimate. We maintain our forecasts pending more details.

altHigh take-up expected. We are positive on this acquisition/project as there is limited supply of affordable small-sized serviced residences within the KLCC-area (majority has size of >1,200 sq ft). Assuming rental yield of 5% (in line with KLCC-area rate) for the project, monthly rental is merely RM1,500, comfortably within the budgets of professionals (including embassy staff).

Adjusting for the recently-completed 1-for-5 bonus issue, our 2010-12 EPS is revised downward by 17% and our new TP is now RM2.20 (-15%). We continue to like Mah Sing as a proxy to the robust domestic property market (1Q10 new sales: +3x YoY, +4.6x QoQ) and expect more land acquisitions to fuel positive sentiment on the stock.

Definition of Ratings
Maybank Investment Bank Research uses the following rating system:

BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between -5% to 10% in the next 12 months
SELL Total return is expected to be below -5% in the next 12 months Applicability of Ratings

The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.

altSome common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure
FCF = Free Cashflow
PE = Price Earnings
BV = Book Value
FV = Fair Value
PEG = PE Ratio To Growth
CAGR = Compounded Annual Growth Rate
FY = Financial Year
PER = PE Ratio
Capex = Capital Expenditure
FYE = Financial Year End
QoQ = Quarter-On-Quarter
CY = Calendar Year
MoM = Month-On-Month
ROA = Return On Asset
DCF = Discounted Cashflow
NAV = Net Asset Value
ROE = Return On Equity
DPS = Dividend Per Share
NTA = Net Tangible Asset
ROSF = Return On Shareholders’ Funds
EBIT = Earnings Before Interest And Tax
P = Price
WACC = Weighted Average Cost Of Capital
EBITDA = EBIT, Depreciation And Amortisation
P.A. = Per Annum
YoY = Year-On-Year
EPS = Earnings Per Share
PAT = Profit After Tax
YTD = Year-To-Date
EV = Enterprise Value
PBT = Profit Before Tax

Disclaimer
This report is for information purposes only and under no circumstances is it to be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that income from such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Bhd and consequently no representation is made as to the accuracy or completeness of this report by Maybank Investment Bank Bhd and it should not be relied upon as such. Accordingly, no liability can be accepted for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Maybank Investment Bank Bhd, its affiliates and related companies and their officers, directors, associates, connected parties and/or employees may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.

altThis report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forwardlooking statements. Maybank Investment Bank Bhd expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

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