Investment Highlights

• We maintain BUY on Mah Sing Group (Mah Sing) with an unchanged SOP-based fair value of RM0.87/share, which reflects a neutral 3-star ESG rating (Exhibits 9 & 10).

• We also maintain our forecasts and sales take-up assumptions following our visit to M Nova's sales gallery in Taman Wahyu, Kepong last Friday.

• M Nova is an 8.1-acre mixed development, comprising 3 blocks of serviced residences, with an estimated gross development value (GDV) of RM790mil. Also, the project has 10 retail units and 1 retail drive-through (Exhibit 1).

• The first 2 blocks (Towers A & B) of the serviced residences offer 3 types of layouts with indicative built-up areas from 700 to 1,000 sq ft (Exhibits 4, 5, 6). Currently, Towers A and B are open for registration. These 2 blocks are anticipated to be launched in 4QFY22.

• Meanwhile, Tower C is scheduled to be launched in FY23 under phase 2. A stand-alone tower, Tower C is linked to the facilities deck at Level 8 with Towers A & B via a sky bridge. While details of Tower C have yet to be finalised, we understand that it will have a total of 826 units.

• M Nova provides a wide range of facilities, including swimming pool, badminton court, co-working space, ehailing waiting/drop-off point, jogging track and bicycle parking. The development also adopts green features such as EV charging stations, delivery parcel lockers and an automated waste collection system.

• The average selling price per square feet for M Nova is expected to range from RM450 to RM500 per square feet (psf). We gather that the psf price is priced 10% to 34% lower compared to the nearest high-rise residential developments (other than Residensi Laman Sari) such as 99 Residence KL North, M Luna and Residensi AVA (Exhibit 8).

• With absolute selling prices of RM318,000–RM450,000, we believe that M Nova’s serviced apartments will appeal to younger buyers, particularly first-time home owners.

• M Nova is located 2km from Kepong Metropolitan Park. Amenities nearby include schools, wet markets, grocers and public transportation such as MRT and KTM stations. It has good connectivity with direct access from the MRR2, and is strategically located 1.8km away from Jalan Kuching and 5km from both Jalan Kepong and the Duke Highway (Exhibit 2).

• M Nova is Mah Sing’s 3rd project located within the neighbourhood of Kepong, after the success of its earlier projects, Lakeville Residence (completed & 100% sold) and M Luna (launched in June 2020, 95% sold with ongoing construction) (Exhibit 7). We expect M Nova to be well-received, given the affordable price range and high demand from the dense population of the mature neighbourhoods of Kepong and Selayang.

• The project is expected to be completed in FY26. Overall, we are positive on the project as it will help sustain Mah Sing’s property earnings over the medium term.

• The stock currently trades at a compelling FY23F PE of 8x vs. 3-year average of 11x with a decent dividend yield of 5%.

Source: AmInvest Research - 22 Jul 2022