RHB Research trims Mah Sing target price to RM1.40, keeps 'Buy' on stable outlook, strong sales

KUALA LUMPUR: RHB Research has maintained its "Buy" call on Mah Sing Group Bhd but trimmed its target price to RM1.40 from RM1.65, citing heightened geopolitical risks in the Middle East despite a stable earnings outlook and encouraging property sales momentum.

At the revised target price, the research firm sees upside potential of about 41 per cent from the stock's current share price, alongside an estimated dividend yield of about 6.0 per cent for financial year 2026 (FY26).

It said Mah Sing's first-quarter FY26 results were within expectations, supported by steady property sales in the first five months of the year, with the company remaining on track to meet its full-year sales target of RM2.76 billion.

For the first five months of 2026, Mah Sing recorded property sales of RM978 million, led by M Grand Minori in Johor (RM137 million), M Aspire in Taman Desa (RM127 million) and M Nova in Kepong (RM107 million).

"While outlook remains stable and landbanking activities should continue, we lower our target price to reflect the geopolitical risk in the Middle East, which may have an impact on profit margins and investor sentiment," RHB Research said in a note.

For Q1 FY26, Mah Sing reported a net profit of RM68.1 million, up 3.1 per cent year-on-year and 10.2 per cent quarter-on-quarter.

Revenue for the quarter stood at RM563.1 million, reflecting slower work progress during the festive season and a higher proportion of projects still in the early stages of construction.

RHB Research said that Mah Sing's net gearing increased to 0.40 times from 0.26 times in the previous quarter, mainly due to dividend payments and outstanding payments related to the acquisition of the Corus Hotel site and the M Mira landbank.

However, gearing levels are expected to ease over the coming quarters as completed projects are anticipated to generate more than RM430 million in vacant possession proceeds.

Mah Sing has a robust launch pipeline worth RM2.06 billion, including projects such as M Mira in Setapak, M Hana in Puchong, M Amaya and M Cora in Penang, and M Tiara 2 in Johor, as well as new phases of existing developments.

The high-end residential project planned for the former Corus Hotel site and the MS Industrial Park @ Kulai development are expected to be launched in the second half of this year.

The research house maintained its FY26 and FY27 earnings forecasts and expects Mah Sing's net profit to grow 12.2 per cent to RM277 million in FY26, supported by new project launches and steady property demand.