• FY23 core net profit of RM218m, came in 5% above our full-year forecast. Revenue grew 12% yoy and EBITDA margin was stable at 16% in FY23.

• New property sales were RM2.26bn in FY23. It guided for a minimum property sales target of RM2.5bn with RM2.8bn planned launches in FY24F.

• Reiterate Add on Mah Sing with an unchanged TP of RM1.10 (based on 0.7x FY24F P/BV). The stock also offers dividend yield of 4.1-4.3% in FY24-25F.

FY23 core net profit beat our estimate and Bloomberg consensus’

• Mah Sing released its 4Q23 results today (27 Feb 2024). Mah Sing’s core net profit (excluding impairments, fair value loss on investment property and PPE write-off) rose 33% yoy and 42% qoq to RM71m in 4Q23 taking FY23F core net profit to RM217.5m (up 19% yoy). This was 5% above our full-year forecast, on higher-than-expected finance income, but 11% above Bloomberg consensus’ estimates.

• FY23 revenue grew 12% yoy, driven by higher new property sales, and higher progress billings from on-going construction activities. EBITDA margin was stable at 16% in FY23.

• As expected, Mah Sing declared dividend of 4 sen for FY23 (FY22: 3 sen), which translates into 45% payout ratio, surpassing the group’s 40% payout policy.

Achieved RM2.26bn property sales in FY23, targets RM2.5bn in FY24F

• New property sales hit RM2.26bn in FY23, ahead of guidance of RM2.2bn. Management attributed 73% of sales to projects in the Klang Valley and 26% in Johor.

• Mah Sing targets minimum property sales of RM2.5bn for FY24F, on the back of RM2.8bn of planned launches. We believe this is achievable given its robust planned launches and affordable products which cater to first-time home buyers.

• In our view, the affordable M-Series products should continue to dominate FY24F planned launches, with 60% of planned launches in Klang Valley and remaining 40% in Johor. In FY23, the M-Series products had take-up rates of 90-100%.

• Unbilled sales stood at RM2.3bn in Dec 23 (c.0.9x cover ratio).

• Its strong balance sheet position with net gearing at a record low of 0.08x at end-23, suggests ample room for future landbanking exercise, in our view.

Reiterate Add with an unchanged TP of RM1.10

• Reiterate Add for its attractive product price points, strong balance sheet position and strong sales momentum. The share price is supported by a 4.1-4.3% dividend yield in FY24-25F. Our TP of RM1.10 is based on 0.7x FY24F P/BV, its 10-year mean.

• Re-rating catalysts include timely completion of projects and continued sales momentum, supported by attractive price points catering to first-time homebuyers.

• Downside risks include delays in planned project completions, i.e. M Arisa and M Luna (slated for completion in 2024F) and wider-than-expected losses from its glove unit due to oversupply pressures on ASPs.

Source: CGS-CIMB Research - 28 Feb 2024