Personally, I love stocks. I think if we buy a good one, its equivalent to a fixed deposit with potential capital appreciation. Nope, I am not talking about buying and monitoring every minute and selling followed by buying again. I have no interest to spend my time this way. Also, there’s no such thing as certainty when it comes to potential dividend yield from a stock that we buy. However, if we believe Macquarie Research, then we may be interested to take a closer look at a listed developer, Mah Sing. Perhaps even buy a few units in anticipation of a 4.4 percent dividend yield, if the share price stays the same as currently. If the share price do move upwards, then there’s a potential to enjoy some profits when we sell later on.
In a report in The Star (31 May 2016), Macquarie Research has retained its outperform rating on Mah Sing with a fair value of RM1.72.This is a 30 percent discount to its realised net asset value (RNAV) estimate of RM2.45 a share. In brief, buying today is considered safe. Mah Sing’s share price closed at 1.44 on 31 May 2016. Take a look at some other price targets in the image from http://klse.i3investor.com/servlets/ptg/8583.jsp I think we can see majority of price targets to be close to Mah Sing’s current share price already.
Macquarie further shared that other reasons for their analysis is because Mah Sing is focussed on affordable housing (50 percent of FY16E launches) in key economic areas, especially in the central region. It then shared something that I did not know. It said, Mah Sing has a weighted average take-up rate of 90% across its portfolio of 23 development projects, much above the Malaysia average of 63%, as per data by the National Property Information Centre (NAPIC). 90 percent meant the developer would now be focussed on building so as to realise the profits.
It has unbilled sales of RM4.75bil (1.8 times revenue from property development in FY15) and this should provide the company with steady earnings for the next 3 years. Mah Sing has a total of 2,470-acre land bank of which 75% is still at the initial life cycle stage. It concluded, “We believe the company has the right strategy and ammunition to sustain growth going forward.” It however revised the FY16E/FY17E profit after tax by -10.5%/-11.8%, due to adjustments to its revenue and EBITDA margin assumptions. In other words, sales are continuing but the margin is squeezed due to the focus in the affordable segment.
I will not be buying additional Mah Sing’s shares beyond the 3,300 units I have currently. Let’s hope Macquarie is right. I can then enjoy a cuti-cuti Malaysia from the share price appreciation. Happy investing.
written on 31 May 2016
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