We have had a tremendous run in SP Setia-WB, as mentioned before, the upside might be as good now as the bulk of news is out there. Although Mah Sing has had a good run up over the past 6 months as well, one should not overlook the further upside on the stock. I like it because of the recent strategies they have employed and is poised for a charge judging from the developments, volume and price movements.
They have sealed two landbank deals in November 2010 spending RM323.8m which would yield a combined GDV of RM2bn. The land include 61 acres of freehold land in Batu Ferringhi and 4.7 acres in Jalan Ampang (MCity project). Mah Sing had also earlier bought 34 acres in Cyberjaya. The Cyberjaya deal was a decent one considering the size and location - the flow on benefits of similar developments surrounding Cyberjaya bodes well for the purchase. One can see that they are not shy about their intentions - build fast, build well in prime areas. Their quick turnaround model reduces the risk and yet lock in the sales in an opportunistic manner. Current remaining unbilled GDV stands at close to RM10bn.
RNAV stands at anywhere between RM2.30-RM2.70 depending on how you value them.
CIMB came out with a target price of RM3.30 and was catapulted as their top property pick in 2011. Well, everyone knows how well they are doing, so whats more for the upside?
Revenue and net profit for 2009 were RM701.6m and RM94.3m respectively. For 2010 those figures probably jumped to RM990m and RM120m. For 2011 those figures are likely to hit RM1.5bn and RM170m respectively. While doing all that it can still maintain a dividend yield of 3%-4% inspite of the uptrending share price.
Mah Sing as a company is highly attractive to top tier HK and Singapore property players. Herein lies my strongest catalyst: a significant player should be getting into Mah Sing in a substantial way. There have been plenty of cold calls and hot calls to Leong Hoy Kum for such a deal and I believe the time is ripe to play the partner tie-up card.
If a top HK or Singapore player is in, it speaks volume for its already top tier branding. Its regional customers would be more willing to follow Mah Sing's projects in a sustained way. Mah Sing's landbanking strategy, quick turnaround, undemanding valuations, great dividends amidst an appreciating share price, great execution and delivery, and a meticulous focus on financials and internal KPIs - makes the stock a natural property play into Malaysia.
The focus of Mah Sing is in the right sector, the mid-to-luxury strata, which the other regional top property players are hoping for. For Mah Sing, as their revenue grows 30% year on year, to just rely solely on Malaysian investors would not be wise as their larger sales volume would require a more sustained growth in demand from regional investors as well.
A corporate exercise could come two ways, one involving solidifying PNB's other property companies under Mah Sing or the issuance of new shares to a top HK/Singapore property company. PNB holds about 22% in Mah Sing. Both possibilities would see Mah Sing treading new grounds. I see little resistance to RM2.50 over the next 3 months. If a corporate exercise eventuate, we are looking at RM3.00 for sure.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees. The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.
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