Strong upside potential seen for Mah Sing
PETALING JAYA: Mah Sing Group Bhd is known for its quick turnaround business model, tending to unlock the value of its land-bank quicker with an estimated project timeline of six to eight years, said Credit Suisse Securities Research.
Credit Suisse, which has given Mah Sing an “outperform” rating with a target price of RM2.90, said this had enabled the company to achieve higher property sales relative to its landbank size.
It added that the price points and concepts in Mah Sing’s product mix were one of the most resilient in the current market environment.
The target price of RM2.90 values the stock at 10.5 times its projected earnings in 2015 and is at a discount to its revised net asset value (RNAV) of RM3.36.
Shares of Mah Sing closed three sen up to RM2.33 yesterday.
“We expect net profit to grow at a compounded annual growth rate (CAGR) of 20% driven by record high unbilled sales of RM4.4bil,” Credit Suisse said. It added that despite the strong growth in sales and net profits, rising 4.9 times and 3.7 times respectively, Mah Sing’s market capitalisation growth continued to lag, rising at slow rate of 2.7 times since 2009.
“Its peers have seen market capitalisation moved more closely in tandem with the growth in sales and net profits,’’ Credit Suisse noted.
Credit Suisse said Mah Sing property sales have tripled since 2007, growing at a compounded annual growth rate (CAGR) of 27%.
Assuming Mah Sing’s market capitalisation was to grow at the same pace as its net profits, it would imply a price of RM3.20, based on Credit Suisse’s calculations.
“If the stock grew at the same pace as its growth in property sales, this would imply a share price of RM4.23,” it added.