Sets higher FY22F new property sales target
? FY21 core earnings came in line, up 79% yoy on stronger sales and lower cost. It proposed a first and final DPS of 2.65 sen, within expectation.
? It targets new property sales of RM2bn and RM2.4bn worth of new projects in FY22F.
Key results highlights
Mah Sing Group’s FY21 core net profit was in line at 101% of our estimate but below Bloomberg consensus’ at 83%. FY21 core net profit (including distribution to holders of perpetual securities) increased 79% yoy, largely driven by stronger operating profit at its property development (+64% yoy) and lower administrative & other expenses (-6% yoy), which mitigated the operating loss at its manufacturing division mainly due to the pre-operating costs of its glove plant. A first and final DPS of 2.65 sen was proposed (vs. 1.66 sen in FY20) as expected, based on 40% dividend payout (earnings before
distribution to perpetual securities/sukuk holders).
Hit FY21 new property sales target
FY21 new property sales came in at RM1.6bn (vs. RM1.1bn in FY20), hitting its FY21 sales target of RM1.6bn, supported by the success of its M-Series of affordably-priced projects and effectiveness of its digital marketing initiatives. The major contributors to FY21 sales were its Klang Valley-centric developments, which made up c.86% of total FY21 sales. As at end-Dec 2021, unbilled sales stood at RM1.9bn vs. RM1.6bn as at end-Dec 2020. The group launched projects worth a total of RM1.44bn in gross development value (GDV) in FY21 vs. RM1.5bn in FY20.
FY22F new property sales target at RM2bn
Mah Sing set a higher new sales target of RM2bn for FY22F given the more aggressive launches in the pipeline. For FY22F, the group plans to launch new projects with a total gross development value (GDV) of RM2.4bn, including M Senyum (Sepang), M Astra (Setapak), M Nova (Kepong), and M Panora (Rawang). By price point, 60% of its FY22F target new sales will likely come from properties priced below RM500,000/unit, 34% priced at RM500,000-699,999/unit, and the remaining 6% at/above RM700,000/unit. It has a booking pipeline of RM800m as of 27 Feb. We gather that its 12 new rubber gloves production lines (total combined capacity of 3.68bn pieces of gloves p.a.) were fully installed in Dec 21. We expect meaningful contribution from its gloves division to start only in 2H22F as the group has only just recently received relevant certificates/clearance to market its medical grade gloves to a few overseas markets.
Reiterate Add
We cut our FY22-23F EPS by 12-24% to reflect the changes in its development timeline and market estimates of glove ASPs. Our SOP-based TP is revised to RM0.75 after updating FY21 numbers. Reiterate Add given its strong sales momentum, additional contribution from its glove unit, and decent dividend yields of 4-5% for FY22-24F.