Target: RM2.84 ()
Share price: RM2.57
More margin expansion to come
Over the weekend, it was reported in the Edge weekly that MCHB is currently undertaking RM1.4bn worth of projects in Seremban, while overall pipeline GDV is RM6.8bn.
At the same time, it is currently still actively looking for new landbank. Of note, its current landbank is sufficient to last it until 2022.
MCHB is also changing its product mix in Bandar Sri Sendayan (BSS) to higher-margin products, such as double-storey terraces and semi-d to target the middle income segment.
Enjoying steadily rising demand for its industrial land in Sendayan Tech Valley
Planning to open matrix global schools, to comprise of international and private primary and secondary schools.
We have factored in margin expansion from its shift in product mix and industrial land sales.
Pros / cons
All these were in line with guidance and our expectations, thus they provide long-term earnings clarity.
Slowdown in sales; escalation in construction and raw material costs; downturn in Seremban and Johor.
Positives: Offers great exposure to the thriving satellite town of Seremban and high dividend yield.
Negatives: Lack of landbank diversification means the company’s fate is closely tied to that of Seremban, although we note that the recent maiden land acquisition in Klang Valley will mitigate some concerns.
Maintain TP at RM2.84 (25% discount to RNAV).