PP 7767/09/2011(028730)

RHB Research
Corporate Highlights
Malaysia
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Co mpa ny Updat e
14 October 2010
MARKET DATELINE

Mah Sing Share Price

Fair Value
:
:
RM1.90
RM2.33
Quick Turnaround Model To Add More Value Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (MAHSING; Code: 8583) Bloomberg: MSGB MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing GDY
Dec (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2009 699.2 94.3 11.3 (8.5) 16.8 - 9.0 1.9 12.3 Net Cash 2.1
2010f 1,049.1 116.6 14.0 23.6 13.6 14.7 (58.4) 1.7 13.2 Net Cash 3.0
2011f 1,171.5 143.1 17.2 22.8 11.0 18.1 21.4 1.6 14.9 Net Cash 3.6
2012f 1,389.8 176.3 21.2 23.2 9.0 22.3 22.3 1.4 16.7 Net Cash 4.5
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC * Consensus Based On IBES Estimates

♦ Projects strategically located. Mah Sing has three projects which are Issued Capital (m shares) 831.6
strategically positioned to benefit from the Government’s MRT network Market Cap (RMm) 1,580.0
development. These are Star Avenue (Sg Buloh station), Icon Mont’ Kiara Daily Trading Vol (m shs) 0.4
(Matrade station) and M Suites (Great Eastern mall station). Apart from Star 52wk Price Range (RM) 1.40-2.00

Avenue, which has not been launched, Icon Mont’ Kiara and M Suites projects Major Shareholders: (%)
Tan Sri Leong Hoy Kum 34.2
are well-received thus far, with a take-up rate of 70% for Block 1 and 30%
PNB 25.0
for Block 2 of Icon MK, and 75% for M Suites.
Koperasi Permodalan Felda 7.7
♦ Buying more landbank soon. Mah Sing is aggressive in its landbanking
FYE Dec FY10 FY11 FY12
activities, which will typically enhance RNAV due to higher contribution to
EPS chg (%) - - -
projects’ DCF. Apart from the more than 100-acre piece of land that it is
Var to Cons (%) (4.6) (4.9) (4.9)
currently eyeing, designated for township development, it is also hunting for
other land parcels, mainly concentrate in the Klang Valley area. We believe PE Band Chart
Mah Sing is likely to seal at least one deal by the end of this year. In addition,
Mah Sing has also proposed the issuance of RM325m convertible bond last
PER = 14x
month. Hence, funding will be ready for the company to source for landbank. PER = 12x
PER = 10x
♦ Record high sales. Mah Sing exceeded its 2010 initial sales target of RM1bn
within 7 months. Given the new launches in 3Q – Kinrara Residence, Icon MK,
M-Suites and One Lagenda, we are confident that Mah Sing is on track to
meet its revised sales target of > RM1.5bn this year. This is at its record high
since 2005, and we believe sales momentum will continue going into 2011.
Relative Performance To FBM KLCI
♦ Risks and concerns. The risks include: 1) cap on loan-to-value ratio
imposed by Bank Negara Malaysia; 2) higher tax bracket for real property
gain tax (RPGT); 3) delays in launches and approvals; and 4) country risks. Mah Sing

♦ Earnings outlook. No change in our earnings forecasts.

FBM KLCI
♦ Quick turnaround model deserves a premium. Mah Sing’s shares
performed as expected, and we still see values given Mah Sing’s aggressive
landbanking effort and strong property sales. The property sector as a whole
will also continue to benefit under the Government’s ETP. The company’s
quick turnaround model has worked well thus far. It has successfully
generated record high sales, but yet valuations are not at its record high –
current FY11 P/B 1.58x vs 1.87x +2 stdev P/B. We believe a premium over its
RNAV is justifiable now, as landbank value is being realised faster, compared
to the average turnaround time of other developers. As such, we impute a
10% premium on our RNAV/share estimate of RM2.11 to derive our indicative Loong Kok Wen, CFA
fair value of RM2.33 (upped from RM2.06). The stock remains one of our top (603) 92802237
picks for the sector and we reiterate our Outperform rating on the stock. loong.kok.wen@rhb.com.my

Please read important disclosures at the end of this report. Page 1 of 5

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Table 2: RNAV breakdown
Projects Remaining Remaining Equity NPV @ 8.3%
size (acres) GDV (RM mil) interest (RM mil)
Launched
Klang Valley
Residential
- StarParc Point Setapak - 5 100% -
- Hijauan Residence, Cheras 25 233 100% 31.5
- Kemuning Residence, Shah Alam - 13 100% -
- Aman Perdana, Meru-Shah Alam 63 126 100% 14.4
- Garden Residence, Cyberjaya 60 531 100% 65.3
- Perdana Residence 2, Selayang 7 32 100% 32.0
Commercial
- Southgate Commercial Centre, KL - 12 100% -
- iParc Bkt Jelutong - 3 100% -
Penang
Residential
- Residence @ Southbay, Penang 3 22 70% 2.3
Johor
Residential
- Sri Pulai Perdana, Skudai 53 60 100% 60.0
- Sri Pulai Perdana 2, Skudai 68 192 100% 15.3
- Austin Perdana, Tebrau 33 68 100% 6.7
- Sierra Perdana, Tebrau-Plentong 180 467 100% 37.2
Not Launched
Klang Valley
Residential
- The Icon Residence, Mont' Kiara 3 298 100% 38.2
- One Legenda, Cheras 10 92 100% 15.6
- Bayu Sekamat, Hulu Langat, Cheras 6 22 100% 2.3
- Garden Plaza, Cyberjaya 6 288 100% 33.2
- M Suites @ Jalan Ampang 1 257 100% 34.8
- Kinrara JV 13.2 100 100% 14.8
- Kinrara Residence 125.8 730 100% 85.4
Commercial
- Icon City, Petaling Jaya 20 838 100% 87.2
- Star Avenue 18 280 100% 27.9
Industrial
- i-Parc 2 @ Shah Alam 19 167 100% 21.3
- i-Parc 3 @ Bukit Jelutong 11 82 100% 9.5
Penang
Residential
- Legenda @ Southbay 1213 335 70% 36.4
- Icon Residence, Georgetown Penang 3 280 70% 27.1
Commercial
- Southbay City 33 911 70% 74.8
Overseas
China Changzhou Project 87.3 256 51% 10.1

Total 2,061 6,700 783.2

Unbilled sales 129.9
Total 913.0
Shareholders' fund 845.7

Total RNAV 1,758.7

Shares base (mil) 831.6

RNAV per share (RM) 2.11

Discount 10%
Fair value per share 2.33

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Table 3. Earnings Forecasts
FYE Dec (RMm) FY09a FY10F FY11F FY12F

Revenue 699.2 1,049.1 1,171.5 1,389.8

Operating profit 143.7 159.5 199.5 251.4

Interest expenses (2.6) (4.4) (4.8) (5.1)

PBT 144.2 159.9 198.8 250.1
Tax (48.4) (41.6) (51.7) (65.0)
Minority interest (1.6) (1.7) (4.0) (8.8)
Net profit 94.3 116.6 143.1 176.3
EPS (sen) 11.3 14.0 17.2 21.2
GDPS (sen) 4.1 5.6 6.9 8.5

Source: Company data, RHBRI estimates

Chart 1: Mah Sing’s sales trend

RM m
1,100
1,020
1,000

900

800
727 727
700

600
509 509
500
394
400

300
2005 2006 2007 2008 2009 7M2010

Source: Company

Chart 2: Forward PB of Mah Sing

2.3

2.0

1.8

1.5

1.3

1.0

0.8

0.5
Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

Average P/B = 1.1x; +2 stdev = 1.87x; -2 stdev = 0.34x

Source: Bloomberg

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Chart 3: Mahsing Technical View Point
♦ The share price of Mahsing has been trading along
an uptrend line (UTL) since Jul 2008.

♦ When it surpassed the RM1.44 level in May 2009,

the stock began a major rangebound trading from
RM1.44 to RM1.64 in most of the periods until a
convincing removal of the resistance level at
RM1.64 in Jun 2010.

♦ Thereafter, the stock headed for a retest of RM1.80

in Jul, and following rounds of volatile sessions, it
finally conquered the RM1.80 level in late Sep
2010.

♦ The stock hit the RM1.95 higher level recently and

triggered a series of profit-taking activities. It
closed yesterday at RM1.90, just above the 10-day
SMA of RM1.89.

♦ Closed with a small “hammer” candle with a

rebound from below the 10-day SMA, the stock
may continue to test out the RM1.95 hurdle in the
near term.

♦ Although the momentum readings are heading

downward, we are confident that it will remain
positive at above the RM1.80 level. Otherwise, its
upward momentum will diminish and it will threaten
the long-term UTL support near RM1.64.

♦ For now, we stay optimistic and foresee a

resumption of its upswing, before marching
towards the RM2.11 all-time high level soon.

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
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be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be
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The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

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Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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securities, subject to the duties of confidentiality, will be made available upon request.

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actions of third parties in this respect.

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