MGB Bhd's (MGB) performance in the first half of 2024 has been impressive, driven significantly by its property development segment. The company reported a core profit of RM28.2 million, marking a 20% year-on-year increase and aligning with expectations at 50% of full-year projections. MGB's property arm, in particular, has been a strong contributor, with a remarkable over 100% growth in pre-tax profit (PBT) due to successful sales and development of several high-value projects, including the Rumah Selangorku Idaman (Idaman) projects. These projects, which have a total gross development value (GDV) of approximately RM1.1 billion, comprise about 3,200 units.
RHB in its review said given MGB's solid performance and future prospects has its analysts maintain a BUY call with a revised target price of RM1.16, reflecting a 37% upside from the current price. This updated target price incorporates a projected yield of around 2% for FY24. The positive outlook is supported by anticipated continued growth in earnings, driven by increased progress billings and ongoing success in property sales.
In the second quarter of 2024, MGB's core profit growth was underpinned by its property development segment, which saw PBT margins remain robust at 17%. This is in contrast to a notable 87% drop in PBT from the construction arm, which is experiencing a decline as some projects reach completion and start-up costs are incurred for new ventures in Saudi Arabia. Despite these challenges, MGB's current construction order book remains strong, valued at RM1.3 billion as of the end of Q2 2024, including significant contracts related to LBS Bina's KITA@Cybersouth township developments.
MGB's future growth potential is further enhanced by its expanding presence in the KSA housing market and opportunities for securing more affordable housing projects in Selangor. The company's ongoing projects under KITA@Cybersouth contribute significantly to its construction order book, and the launch of additional projects by LBS Bina could bolster MGB's job replenishment prospects.
