RHB Research initiates coverage on Mah Sing with an Outperform

KUALA LUMPUR: RHB Research Institute is initiating coverage on Mah Sing with an Outperform because of its fast turnaround business model with improving prospects.

It said on Thursday, Jan 28  Mah Sing is famous for its “fast turnaround” business model which enables it to crystalise land value and receive strong cash flow within a short period as well as encounter lower upfront costs.

Apart from property business, the company is also involved in the manufacturing of plastic products.

RHB Research said the current upcycle in property market will benefit Mah Sing and expects the company’s FY10 sales target of RM1 billion is attainable.

Other factors are Mah Sing’s strong balance sheet (with net cash position of six  sen/share post private placement) will allow the company to gear up for future development or expansion activities.

It also has a healthy unbilled sales of RM791 million as at 3Q09 (or 1.2 times of RHB Research’s FY10 property development revenue forecast).

Another  plus is Mah Sing’s generous dividend payout policy of 40%; and hands-on management and reputable shareholders.

“We are expecting 3-year EPS CAGR of 10%, supported by its unbilled sales of RM791 million and ongoing as well as future property projects.

“The company is now trading at undemanding 11 times FY10 EPS (versus the industry average of 11.8 times). We value Mah Sing at RM2.15, based on RNAV method. Initiate coverage on Mah Sing with an Outperform rating,” it said.