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Monday, September 8, 2014

Mah Sing Group - The “Manhattan” in Puchong


The upcoming Puchong project (near IOI Mall) will likely be the key sales driver from 2016 onwards.

Management remains confident to hit its FY14 sales target; it does not discount the possibility of raising money from the capital market to fund its aggressive landbank expansion.

Maintain earnings forecasts, MYR2.96 RNAV-based TP. BUY.
What’s New

Last Friday’s analyst briefing focused on MSGB’s newly-acquired land in Puchong (88.7 acres; MYR9.3b GDV). Traffic flow pattern and LRT/highway network connectivity as well as the concept for the Puchong project were discussed during the briefing.

MSGB is now finalising the development plan. It intends a “Manhattan”-liked mixed development (53% residential, 47% commercial) comprising service apartments, office towers, shop offices, retail lots, a retail mall and a hotel, surrounded by a lake.
What’s Our View

The Puchong project will likely overtake Southville City, Bangi as the key sales driver from 2016 onwards given its strategic location (in the centre of Puchong, near to IOI mall) supported by the new LRT stations, we think. No change to our earnings forecasts and TP as we have already incorporated this project into our model.

Management remains confident on hitting its MYR3.6b sales target for FY14. Thus far, it has locked in MYR1.55b in 1H14 or 43% of its sales target. It is still aggressively looking to expand its landbank. To strengthen its balance sheet, it does not discount the possibility of raising fund from the capital market including issuing perpetual bond to avoid a direct impact on gearing ratios.

Source: Maybank Research - 8 Sep 2014

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