MGB’s 1QFY24 net profit grew by 17.4% YoY to RM14.3m, mainly due to better performance in its property division. The results were in line with our expectations at 23% of full-year estimates though below consensus at 21%. Outlook for the Group remains resilient, underpinned by its construction orderbook of approximately RM1.23bn and unbilled sales of RM0.74bn from on-going property development projects. The Group’s venture with SANY Alameriah Industrial is on track and material contribution should kick in from 2HFY24 onwards. We keep our earnings forecast unchanged and retain our Outperform call with an unchanged SOTP derived TP of RM1.16.

• 1QFY24 topline rose 22.6% YoY. The topline improvement was mainly owing to significant headway made in its property division. Revenue from property division increased by more than eightfold or RM78.5m YoY to RM87.6m, attributed to higher unit sales and progress development for the Idaman Melur, Idaman Cahaya Phase 1 & Phase 2, Idaman Sari and Saujana Indah Phase 1 projects. However, this was partly negated by lower revenue from the construction division (-22.7% YoY), mainly due to projects nearing completion.

• 1QFY24 pretax profit (PBT) rose 28.2% YoY. The higher PBT was mainly driven by remarkable improvement in its property division which has increased by fourfold or RM12.4m YoY to RM15.5m, in line with higher revenue. This was partly offset by lower PBT from the construction division (-58.7% YoY), mainly due to higher administrative expenses and cost incurred in its oversea subsidiary.

• Outlook. The outlook for MGB remains resilient, underpinned by its construction orderbook of approximately RM1.23bn and unbilled sales of RM0.74bn from on-going property development projects. The Group remains focused on the construction of affordable homes and maintaining its orderbook replenishment target of RM600m for FY24. On its venture with SANY Alameriah Industrial, the fulfillment of the first order for supplying and installing precast concrete products for 400 villas in Roshn Alarous Project is on track and material contribution could kick in from 2HFY24 onwards.

Source: PublicInvest Research - 17 May 2024