Credit Suisse has upgraded Mah Sing’s stock to outperform following a sharp share price correction.
In an analyst report, Credit Suisse also consideres Mah Sing’s unconventional marketing methods such as virtual sales galleries and internet marketing tools to be successful in driving sales,
The property developer managed to secure RM40 million in new bookings in the first two weeks of April.
However, the financial services company has also lowered Mah Sing’s property sales assumption for the year to RM 1.4 billion, initial sales target for 2020 was at RM 1.6 billion.
The report further stated that the lower revenue recognition is likely due to the halt in construction arising from the Movement Control Order (MCO).
Mah Sing’s share price was also corrected to 38 percent year to date (YTD). This comes after a decline of 23 percent in 2019.
“One of the key culprits was the soft property market, but Mah Sing’s exposure to the high-rise residential segment has also resulted in it selling more units to meet similar level of property sales in the past,” the report stated.
“We believe the cumulative 75 bp rate cut over the past one year will help to improve affordability,” Credit Suisse stated in the report.
According to Credit Suisse, 84 percent of Mah Sing’s product portfolio are priced below RM 700,000.
The property developer’s balance sheet is relatively healthy with a 24 percent net gearing, while management is sticking to its 40 percent dividend pay-out policy, translating into an 7.5 percent yield in 2021 based on Credit Suisse’s estimation.