Mah Sing: CIMB - Target Price: RM6.50

Below is the research repot from CIMB:

Mah Sing update – Geographical diversification complete

The recent acquisition of 87 acres of land bank in Penang completes Mah Sing's geographical diversification in all three major property markets in Malaysia. The Penang land comprises only 14% of the group's 650-acre land bank but makes up 37% of the total GDV of RM3.5bn. We have raised FY08-09 earnings forecasts by 3% as contribution from Southbay Penang will offset slower-than-estimated sales from the recently launched Cheras and Johor projects. Our target price, however, has been raised from RM6.00 to RM6.50 as we now value the stock at the sector 2008 P/E of 16x, instead of a 20% discount to the previous target sector P/E of 18x. We maintain our BUY call. Re-rating catalysts include further value-enhancing land bank acquisitions and improved liquidity from the upcoming share split and bonus issues.