Having ended last season with victory in a Group Three at Newmarket in October, the three-year-old is a general 20-1 shot for the premier Classic on June 2.
Although plans remain fluid as to a potential starting point for the son of Dubawi, the Newmarket handler reported him to be showing all the right signs at home.
Appleby said: "Ghaiyyath is wintering away well and I am pleased with what he is doing. Physically he was an imposing two-year-old. He is just doing all the right things and putting on the condition in the right places and he looks well.
"We will see where we are in the spring in respects of a starting point. I'd like to think we are dealing with a horse we could think of as a Derby candidate.
"As you have seen, he has had a hood on and we are keen to see whether we can take the hood off.
"He has had it off in slow-paced work, but it is when we start building him back up in the spring, that will tell us trip-wise where we are going with him."
Applebly has earmarked the French Derby as a potential long-term target for Masar, who was last seen finishing down the field in the Breeders' Cup Juvenile Turf at Santa Anita in November. The son of Derby winner New Approach previously finished third in the Prix Jean-Luc Lagadere after winning the Solario Stakes at Sandown.
He said: "I think he will get further than a mile this year to be honest.
"Unfortunately we didn't see the real Masar in America. It was one of those messy races and it didn't pan out for him. He came out of it well and gained good experience.
"I would not run away from something like a Guineas on the back of his Solario success at Sandown, but I feel he is a horse that would get a mile and a quarter no problem so he could be one for the French Derby."
Classic thoughts are also in the pipeline for Prix Marcel Boussac heroine Wild Illusion, with Appleby considering both the Qipco 1000 Guineas at Newmarket and the Investec Oaks for the daughter of New Approach.
He said: "She is a very good-looking and straightforward filly and is wintering well and doing all the right stuff. We will start building her work up at the end of this month.
"I think she is a filly that will get a trip, but in saying that, as she showed at Chantilly, she is not short of pace and is up there with the best of the fillies over a mile.
"I've always thought the Guineas is a nice trial for the Oaks. Hopefully we will be looking at going down that Classic route with her."
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