PP 7767/09/2010(025354)

14 April 2010

Malaysia Corporate Highlights

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

Com pany Upda te

15 April 2010
MARKET DATELINE

Mah Sing Share Price

Fair Value
:
:
RM1.72
RM2.04
1QFY12/10 Sales More Than Tripled 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 701.6 94.3 11.3 (8.5) 15.2 - 8.2 1.7 11.1 Net cash 3.8
2010F 817.6 109.5 13.2 16.1 13.1 14 9.8 1.6 12.0 Net cash 4.1
2011F 951.0 146.3 17.6 33.7 9.8 17 3.6 1.4 14.6 Net cash 5.5
2012F 1,237.6 184.9 22.2 26.3 7.7 20 2.0 1.3 16.7 Net cash 6.9
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC * Consensus Based On IBES Estimates

♦ 1Q sales more than tripled. Mah Sing’s 1QFY12/10 sales more than tripled Issued Capital (m shares) 693.0
to RM516m, from RM170.2m a year ago, thanks to good responses to its new Market Cap(RMm) 1,191.9
projects. With sales expected to sustain in the coming quarters underpinned Daily Trading Vol (m shs) 0.7
by new launches, FY12/10 sales target of RM1bn now appears within reach. 52wk Price Range (RM) 1.383-1.83
Major Shareholders: (%)
♦ Excellent products. Southbay City, a RM911m waterfront commercial/retail Tan Sri Leong Hoy Kum 34.2
property project in the southwest of Penang island will be launched by PNB 25.0
4QFY12/10. We are bullish on the project mainly because of its good location Koperasi Permodalan Felda 7.7
as well as the shortage of integrated commercial/retail property projects in
FYE Dec FY10 FY11 FY12
the area. Meanwhile, Garden Residence & Garden Plaza are set to ride on the EPS chg (%) (16.7) (16.7) (16.7)
“second wave” of Cyberjaya’s development, driven by new investments and a Var to Cons (%) (6.0) 3.5 11.2
shorter travelling time between KL City and Cyberjaya with the completion of
the Maju Expressway. As for Icon Residence @ Mont Kiara which is targeted PE Band Chart

at young working couples or families who like a good address at an affordable

price, it has thus far clocked up about 3,628 registrants. We believe it will be PER = 14x
a complete sellout upon official launching in 3Q10. PER = 12x
PER = 10x
♦ Mah Sing to get federal land? While not generally perceived by the market
as one of the front runners for federal land parcels earmarked for
development, we feel that investors should not write off Mah Sing entirely.
This is because: (1) it boasts a decent list of government-linked shareholders
i.e. PNB (23.6% stake), EPF (8.4%) and FELDA (7.7%); and (2) Of its strong
balance sheet with net cash of RM176.5m or 27.9 sen as at 31 Dec 09; and Relative Performance To FBM KLCI

(3) Of its good track record in delivering various types of properties.

FBM KLCI
♦ Risks and concerns. The risks include: 1) potential cancellation of purchase
agreement by buyers; 2) competition from peers; 3) delays in launches and
approvals; and 4) country risk.

♦ Earnings outlook. We have adjusted our FY10-12 EPS forecasts for the 1- Mah Sing
for-5 bonus issue that was completed in Apr, resulting in our estimates being
lowered by 16.7% p.a.. Due to the larger number of shares, we have also
lowered our RNAV per share from RM2.45 to RM2.04.

♦ Valuation. We like Mah Sing: (1) As a proxy to the upturn in the local
property market; (2) strong net profit CAGR of 25% between 2009-12; and
(3) The generally short turnaround time for its property projects that means
lower holding costs and strong cashflow. Our RNAV-based fair value has been
Joshua Ng
lowered from RM2.45 to RM2.04 after the recent bonus issue exercise. We are
(603) 92802237
maintaining Outperform rating on the stock. joshuang@rhb.com.my

Please read important disclosures at the end of this report.

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 14 April 2010

♦ 1Q sales more than tripled. Mah Sing’s 1QFY12/10 sales more than tripled to RM516m, from RM170.2m a year
ago, thanks to good responses to its new projects i.e. Garden Residence in Cyberjaya, Perdana Residence 2 in
Selayang, iParc Bukit Jelutong as well as StarParc Point. With sales expected to sustain in the coming quarters
underpinned by new launches (see Table 2), FY12/10 sales target of RM1bn now appears within reach (in our
earnings forecasts, we conservatively assume Mah Sing to register RM924m sales in FY12/10). Among the new
projects we are particularly excited over, are Southbay City in Penang, Icon Residence @ Mont Kiara as well as
Garden Residence & Garden Plaza @ Cyberjaya.

Table 2: Mah Sing’s new property launches

Total GDV (RMm) Launch date Remarks
Future projects
Klang Valley
1. Icon Residence, Mont 279 By 3Q10 260 units of serviced suites with an average selling price of RM750-900
Kiara psf (semi-furnish). The company has clocked up 3,268 registrants for
the project thus far.
2. One Legenda, Cheras 84 By 2Q10 26 units of 3-storey bungalows with an average selling price per unit of
about RM2.9m.
3. Garden Residence, 690 Mar 10 Gated and guarded self-contained mini-township including a clubhouse
Cyberjaya and various facilities and amenities. 2- and 3-storey superlink homes
and semi-detached homes. YTD, the project has hit 50% take-up rate.
4. Garden Plaza 288 4Q10 Lifestyle retail outlets and resort-style modern garden suites
(apartments).
5. iParc2 @ Shah Alam 143 2Q10 3-storey semi-detached factories with layout flexibility options priced at
RM2.6m each. The company has received strong interest for the project
and intends to launch the project in the near term.
6. Perdana Residence 2, 209 By 1Q10 A residential property project with 268 units super-link homes. Selling
Selayang prices from RM868.8k onwards. YTD, the project has achieved strong
take-up of 92%.
7. Petaling Jaya 838 By 4Q10 Commercial development comprising shop offices, semi-detached
Commercial Hub offices, SOHO and retail units. The company is finalising project plans.
8. Bayu Sekamat, Hulu 22 By 2Q10 Link homes and low to medium cost flats.
Langat

Penang
9. Legenda@ Southbay, 284 By 2Q10 An exclusive designer bungalow project with selling price from RM3.5m
Penang each onwards.
10. Southbay City, 911 By 4Q10 Commercial development comprising shop offices, offices,
Penang condominiums, a hotel and retail units. The first phase of the project i.e.
service residences (with estimated GDV of RM150m) called Southbay
Plaza will be launched in 4Q10.
11. Icon Residence, 280 2011 290 units of luxury condominiums.
Georgetown
Source: Mah Sing

♦ Maiden launch of Southbay City in 4Q. Mah Sing is expected to launch its Southbay City, a RM911m
waterfront commercial/retail property project in the southwest of Penang island, in 4QFY12/10. We are bullish on
the project mainly because of: (1) Its good location in the southern growth corridor of Penang Island, only about
1-3km from Penang International Airport, Bayan Lepas Industrial Zone (FIZ), mature areas such as Queensbay,
Bayan Baru and Bukit Jambul, and the Second Penang Bridge currently under construction; (2) The shortage of
intergrated commercial/retail property projects in the area. Mah Sing is reasonably familiar with the market
given its existing residential property project in the area called Residence@Southbay. Mah Sing has registered
more than 90% take-up for the superlink homes launched under the project. Mah Sing will kick start Southbay
City with the launching of service residences with an estimated GDV of RM150m.

Chart 1: Location of Southbay City Chart 2: Artist impression on Southbay City

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♦ Garden Residence & Garden Plaza to ride on the “second wave” of Cyberjaya’s development. Garden
Residence & Garden Plaza with a combined GDV of RM978m are set to ride on, what we call, the “second wave”
of Cyberjaya’s development driven by new investments (and hence economic activities and the housing need)
and a shorter travelling time between KL City and Cyberjaya with the completion of the Maju Expressway. Garden
Residence, a gated and guarded self-contained mini-township, has achieved more than 50% take-up since its
official launch in Mar 10. We expect Mah Sing to do equally well with Garden Plaza, a retail-cum-residential
property project on a piece of land measuring 6.3 acres adjacent to Garden Residence.

♦ Icon Residence @ Mont Kiara is targeted at the affordable segment. We expect Mah Sing to do well in the
relatively crowded residential property market in Mont Kiara with its Icon Residence @ Mont Kiara largely because
of, what we term as, the “now everyone can live in Mont Kiara” strategy. Icon Residence @ Mont Kiara is
targeted at young working couples or families who like a good address at an affordable price. This 260 units of
garden-themed semi-furnished serviced suites will have a built-up area of 850 sq ft and onwards (vis-à-vis 1,500
sq ft and onwards of most projects in the Mont Kiara area) with an average selling price of RM750-900 psf (semi-
furnished), vis-à-vis RM600-900 psf of unfurnished projects in the Mont Kiara area. The project has thus far
clocked up 3,628 registrants and we believe it will be a complete sellout upon its official launching in 3QFY12/10.

♦ Mah Sing to get federal land? While not generally perceived by the market as one of the front runners (such
as MRCB, SP Setia and IJM Land) for federal land parcels earmarked for development (those along Jalan Stonor,
Jalan Ampang and Jalan Lidcol in Kuala Lumpur as well as the 3,000 acres in Sungai Buloh), we feel that
investors should not write off Mah Sing entirely. This is because: (1) It boasts a decent list of government-linked
shareholders i.e. PNB (23.6% stake), EPF (8.4%) and FELDA (7.7%); and (2) Of its strong balance sheet with net
cash of RM176.5m or 27.9 sen as at 31 Dec 09; and (3) Of its good track record in delivering various types of
properties.

♦ Earnings outlook. No change to our net profit forecasts. However, we have adjusted our FY10-12 EPS forecasts
for the 1-for-5 bonus issue that was completed in Apr (ex-date and entitlement date were 5 Apr 10 and 7 Apr 10
respectively), resulting in our estimates being lowered by 16.7% p.a.. Due to the enlarged share base, we have
also lowered our RNAV per share from RM2.45 to RM2.04 (see Table 4).

♦ Risks and concerns. The risks include: 1) potential cancellation of purchase agreement by buyers; 2)
competition from peers; 3) delays in launches and approvals; and 4) country risk.

♦ Valuation. We like Mah Sing: (1) As a proxy to the upturn in the local property market; (2) For its strong net
profit CAGR of 25% between FY12/09 and FY12/12 driven largely by new launches in the Klang Valley and
Penang Island; and (3) The generally short turnaround time for its property projects that means lower holding
costs and strong cashflow. Our RNAV-based fair value has been lowered from RM2.45 to RM2.04 (see Table 4)
after the recent bonus issue exercise. We are maintaining Outperform rating on the stock.

Table 3. Earnings Forecasts

FYE Dec (RMm) FY09a FY10F FY11F FY12F

Revenue 701.6 817.6 951.0 1,237.6

Operating profit 146.4 169.2 209.8 275.9

Interest expenses (2.2) (8.3) (7.8) (6.2)

PBT 144.2 161.0 202.0 269.7
Tax 95.8 120.7 151.5 202.3
Minority interest (1.6) (11.2) (5.2) (17.4)
Net profit 94.3 109.5 146.3 184.9
EPS (sen) 11.3 13.2 17.6 22.2
GDPS (sen) 6.5 7.0 9.4 11.9

Source: Company data, RHBRI estimates

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Table 4: RNAV
Project DCF (RMm) *
On going projects
1. Aman Perdana, Meru-Shah Alam 23.2
2. Sri Pulai Perdana, Skudai 9.1
3. Sri Pulai Perdana 2, Skudai 26.2
4. Austin Perdana, Tebrau 8.5
5. Sierra Perdana, Tebrau 48.9
6. Southgate Commercial Centre, KL 67.1
7. StarParc Point, Setapak 24.9
8. Hijauan Residence, cheras 36.0
9. Kemuning Residence, Shah Alam 3.4
10. Residence @ Southbay, Penang 22.1

Future projects
11. Legenda @ Southbay, Penang 36.4
12. Southbay City, Penang 106.3
13. Icon Residence, Mont Kiara 50.6
14. One Legenda, Cheras 16.1
15. Bayu Sekamat, Hulu Langat (2.0)
16. Garden Residence, Cyberjaya 94.6
17. iParc, Bukit Jelutong 19.6
18. Perdana Residence 2, Selayang 32.6
19. Petaling Jaya Commercial Hub 133.5
20. Icon Residence, Georgetown 28.3
21. iParc 2 22.4
22. Commercial project in Cyberjaya 43.0
Total 850.7
Shareholders fund as at Dec 09 845.7
Total RNAV 1,696.3
Number of shares 831.6
RNAV per share (RM) 2.04
* WACC of 6.2%

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Chart 3: Mahsing Technical View Point

♦ After reclaiming the RM1.25 level in Oct 2008,
Mahsing recovered steadily along the UTL, and by
May last year, it has managed to re-cross above
the RM1.44 resistance level.

♦ However, the stock was trapped within the region

of RM1.44 – RM1.64 in recent months after failing
an attempt to sustain at above the RM1.64
technical hurdle in Aug – Sep 2009.

♦ Only in early Apr 2010, the stock removed RM1.64

successfully and rallied to a high of RM1.83. But
the recent profit-taking activities have pressed it
lower to RM1.69, before closing at RM1.72
yesterday.

♦ Technically, it has closed with a positive candle,

and survived at above the 10-day SMA of RM1.71.
This suggests a possible technical rebound in the
near term.

♦ As such, investors should expect a technical

rebound to retest RM1.83, near our resistance level
of RM1.80 soon, if it continues to trade above the
supportive 10-day SMA.

♦ Further resistances are at RM1.95 and RM2.11

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
(previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable law. The
opinions and information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or
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
construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any
manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against RHBRI. RHBRI and/or its associated persons
may from time to time have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives
of persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
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This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

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.

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.

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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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