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Monday, January 26, 2015

AllianceDBS Research maintains Buy on MKH, cuts target to RM4.10

KUALA LUMPUR (Jan 26): AllianceDBS Research has maintained its “Buy” rating on MKH Bhd at RM2.72 with a lower target price of RM4.10 (from RM5.40) and said despite the weak sentiment in the property sector, MKH continued to achieve strong property sales, thanks to its core focus on affordable housing.

In a note Monday, the research house said MKH’s FY14 unbilled sales were at a record high of RM823 million (+64% y-o-y) due to its impressive RM820 million sales (+41% y-o-y) which exceeded its own RM800 million sales target.

“This will underpin strong earnings visibility over the next two years. MKH aims to secure RM850 million sales in FY15 on the back of RM1.3 billion launches.

“We understand some of its projects (Hillpark Homes 3, Saville@D’Lake Puchong) have received strong response, judging by the initial registration,” it said.

“We revised down our SOPderived target price to RM4.10, after rolling over plantation valuation base to FY15 and widening property discount to 50% (from 35%).

“We believe the recent sell-down has already priced in weak sentiment in the property market. Reiterate our Buy rating as we continue to like its strong earnings prospects with a projected 3-year CAGR of 25%,” it said.

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