Long-term outlook for Mah Sing remains positive

KUCHING: Mah Sing Bhd’s (Mah Sing) long-term outlook remains positive, backed by strong sales achieved in the past few quarters, analysts observed.

Following a recent meeting with Mah Sing, the research team at AmInvestment Bank Bhd (AmInvestment) said aside from its strong sales, it is positive on its prospects based on its upcoming launches.

“We believe the long-term outlook for Mah Sing remains positive backed by strong sales achieved in the past few quarters. Moreover, we expect the upcoming launches to be well received given their strategic locations and attractive pricing,” it said.

It noted that Mah Sing is targeting new sales of at least RM1.5 billion in FY20 (FY19:

RM1.5 billion). The company has also lined up several launches for 2020 with a combined gross development value (GDV) of RM1.8 billion which is 80 per cent higher than FY19’s RM1 billion.

“About 75 per cent of this year’s launches will be concentrated in the central region of Peninsular Malaysia with the key selling points being affordability, strategic locations, and good connectivity,” it added.

Meanwhile, AmInvestment pointed out that Mah Sing chalked up new sales of RM1.136 billion in the first nine months of FY19 (9MFY19), and is on track to achieve its FY19 target of RM1.5 billion.

“The sales were mainly secured from new launches in 2019 which were mainly priced below RM500,000. The first phase of M Oscar (200 units) achieved a takeup rate of 100 per cent during its initial launch in October 2019.

“Meanwhile, unbilled sales of RM1.7 billion will be progressively recognized over the next three years. Currently, Mah Sing has total landbank of more than 2,000 acres, with a GDV of RM24 billion, which will provide earnings visibility and drive the company’s growth going forward,” it added.

Mah Sing’s balance sheet also remains healthy with net cash per share of 21 sen as of 9MFY19.

“We believe the group is in a strong position to expand its landbank with a cash pile over RM1 billion. Mah Sing is also planning to redeem RM540 million (at 6.8 per cent per annum) worth of perpetual sukuk in FY20 which will be financed via bank borrowings.

“We reckon the redemption of this perpetual sukuk and its conversion into conventional loan will provide savings of about RM10 million per year,” AmInvestment said.