PP 7767/09/2010(025354)

6 July 2010

Malaysia Corporate Highlights

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

News Upda te
6 July 2010
MARKET DATELINE

Mah Sing Share Price

Fair Value
:
:
RM1.66
RM2.09
To Take Over A Mahajaya’s Project In Kinrara 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) 14.6 - 7.9 1.6 11.1 Net cash 3.9
2010F 817.6 109.2 13.1 15.8 12.6 14 9.0 1.5 12.0 Net cash 4.2
2011F 981.8 152.0 18.3 39.3 9.1 17 2.9 1.4 15.2 Net cash 5.9
2012F 1,335.3 204.0 24.5 34.2 6.8 22 1.6 1.2 18.1 Net cash 7.9
Main Market Listing /Trustee Stock/Syariah Approved Stock By The SC * Consensus Based On IBES Estimates

♦ To pick up where Mahajaya let off. Mah Sing is taking over a property Issued Capital (m shares) 831.6
project of peer Mahajaya in Taman Damai Utama, Kinrara, Puchong, Market Cap(RMm) 1,380.4
comprising 180 two- and two-and-a-half-storey link houses with an Daily Trading Vol (m shs) 0.6
estimated GDV of RM100m. Mah Sing will pay Mahajaya RM35.4m 52wk Price Range (RM) 1.40-1.83
Major Shareholders: (%)
progressively over 12 months for the project’s 7.59-acre land (net) that
Tan Sri Leong Hoy Kum 34.2
forms part of the fairly mature 274-acre Taman Damai Utama (with more
PNB 25.0
than 700 units of residential and commercial properties already being sold Koperasi Permodalan Felda 7.7
and handed over to-date). The land comes with completed infrastructure
as well as eight units of show houses. Since the launch by Mahajaya in Apr FYE Dec FY10 FY11 FY12
2010, 53 units have been sold, while 27 units “booked”. EPS chg (%) - - -
Var to Cons (%) (6.2) 7.5 11.5
♦ Land price appears reasonable. At about RM107 psf, the land price
appears reasonable. Residential land with completed infrastructure, the PE Band Chart
closest being bungalow lots in the area are going at RM81-156 psf (asking
PER = 14x
prices) (see Table 2). Moreover, the Mahajaya land comes with eight show PER = 12x
PER = 10x
houses coupled with 30% locked-in sales. Ceteris paribus, the acquisition
will increase Mah Sing’s net debt and gearing of RM42.8m and 0.05x as at
31 Mar 2010 to RM78.2m and 0.09x that is still highly manageable.
Assuming a PBT margin and tax rate of 20% and 25%, the project will fetch
RM15m net profit over the next two years, or an NPV of RM13m or
1.6sen/share based on a discount rate of 10%. We are positive on the
latest development. Relative Performance To FBM KLCI

♦ Forecasts. Maintained pending the completion of the deal.

♦ Risks and concerns. The risks include: (1) A shortened property upcycle; FBM KLCI
(2) Rising mortgage rates that hurt affordability; and (3) Delays in Mah Sing

obtaining project approvals.

♦ Maintain Outperform. We continue to like Mah Sing given: (1) Its
opportunistic land acquisition strategy that enables short turnaround times
for its property projects; (2) Its strong net profit CAGR of 29% between
FY12/09-12; and (3) It being a good proxy to the upturn in the local
property market. Indicative fair value is RM2.09 based on RNAV (see Table
3).

Joshua CY Ng
(603) 92802151
Please read important disclosures at the end of this report.
joshuang@rhb.com.my

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Table 2: Asking Prices For Residential Land In Kinrara, Puchong

Location Area Asking Price Unique Features
(sq ft) (RM psf)
Bandar Kinrara 11,000 135 With club house, 24hr security
Bandar Kinrara 10,874 81 -
Bandar Kinrara 6,400 156 With ready infrastructure
Bandar Kinrara 11,416 112 Flat land
Near Kinrara Golf Club 16,800 118 -
Source: Various property portals

Table 3: 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 @ Shah Alam 22.4
22. Commercial project in Cyberjaya 43.0
23. M Suites @ Jalan Ampang 38.9
Total 889.6
Shareholders fund as at Dec 09 845.7
Total RNAV 1,735.2
Number of shares 831.6
RNAV per share (RM) 2.09
* WACC of 6.2%

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Table 4. Earnings Forecasts

Table 5: WACC assumption
FYE Dec (RMm) FY09a FY10F FY11F FY12F

(%)
Revenue 701.6 817.6 981.8 1,335.3
Risk free rate 4.2
Operating profit 146.4 169.2 217.5 300.3
Equity risk 6.5
premium
Interest expenses (2.2) (8.7) (7.9) (5.2)
Beta 0.625
PBT 144.2 160.5 209.6 295.1
WACC 6.2
Tax 95.8 120.4 157.2 221.3
Minority interest (1.6) (11.2) (5.2) (17.4)
Net profit 94.3 109.2 152.0 204.0
EPS (sen) 11.3 13.1 18.3 24.5
GDPS (sen) 6.5 7.0 9.8 13.1

Source: Company data, RHBRI estimates

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Industry/Sector Ratings

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