KUALA LUMPUR: CIMB has singled out the Mah Sing Groupas its top property pick, rating it Outperform while maintaining a target price of RM3.48 (the stock opened at RM2.49 on Wednesday, July 10).
It said the group’s strong earnings growth, new sales and landbanking efforts should provide re-rating catalysts, advising investors to continue to accumulate Mah Sing because “the group offers the best exposure to a pure Malaysian property play, backed by an excellent track record for execution and aggressive growth”.
CIMB reported that it had taken Mah Sing’s management on a “non-deal road show” to London, Edinburgh and Paris the week before to meet with investors keen to the latest in the Malaysian property market.
“There were no major surprises from the meetings as we have followed Mah Sing's progress closely. We believe investors were impressed with Mah Sing's strong performance over the years and its lofty ambitions which are tempered by carefully calculated moves,” it said.
Explaining that the group started as a plastic injection moulding company that expanded into the property business, it said Mah Sing retained one aspect of its original manufacturing culture – a relatively asset-light and quick-turnaround business model.
Mah Sing, in its meetings with the prospective investors, said it was most optimistic about the Klang Valley in light of the major infrastructure projects like the MRT and high-speed rail which will improve accessibility.
It said it was a bit more cautious about the prospects forIskandar Malaysia and was worried about a situation of potential oversupply several years down the road, especially when some high-end condos come onstream.
The group acquired four parcels of land this year, including two in Kuala Lumpur and Iskandar Malaysia, Johor for RM438.35 million, and is eyeing more landbank in the Klang Valley, with sizes ranging from 100-700 acres for township-oriented landbank.
“It is one of the few developers with exposure to all major property markets in Malaysia, i.e. the Klang Valley, Johor, Penang and Sabah. We share management's positive view on the Klang Valley in light of the Greater Kuala Lumpur Transformation Programme.
“We are more optimistic than Mah Sing on the longer-term potential of Iskandar Malaysia. We like Penang for its heritage status and the imminent completion of the second Penang Bridge, while Sabah can no longer be ignored as it has enjoyed some of the strongest residential price appreciation over the past 10 years. Mah Sing remains our top pick in the property sector,” CIMB concluded.
(The Star, July 10)
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