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RHB raises fair value for Mah Sing to RM2.58 after 3Q profit

KUALA LUMPUR (Nov 19): RHB Research Institute retained a neutral stance on Mah Sing Group Bhd but raised its fair value by 3.2% to RM2.58 after the property developer reported a 27.8% year-on-year jump in third quarter earnings Monday afternoon.

In a note following Mah Sing's results release, RHB said Mah Sing's 3Q earnings was "in-line" with expectations but it is raising its price target from RM2.50 to RM2.58 to account for higher gross development value (GDV) for the developer's Southville City and Sutera Avenue developments.

"We maintain our market perform rating on Mah Sing, as sentiment on property stocks is likely to stay cautious ahead of the general election," RHB said in a note today (Monday), adding that its price target was at a 15% discount to its revised revised net asset value estimate of RM3.04 per share.

RHB did not change its forecasts for Mah Sing, whose unbilled sales stood at RM2.95 billion.

May Sing is targeting RM3 billion sales for 2013, a 20% increase from 2012's target of RM2.5 billion.

"We believe the major contributor would be Southville City in Bangi, where GDV for the township project has been revised upwards to RM3.63 billion from RM2.15 billion as a result of proposed changes to the development components to include more commercial content," RHB said in the note.

Downside risks for the stock include softer economic growth dampening property demand.

At 4.31pm, Mah Sing was up 1 sen or 0.44% to RM2.28, off an earlier intra-day high of RM2.29, with about 1.4 million shares done.

RHB's price target of RM2.58 implies a 13.2% upside potential.

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