- Maintain BUY on Mah Sing with an unchanged fair value of RM3.03/share, based on a 25% discount to its NAV. Mah Sing held a special preview of its much-awaited The Meridin@Medini project in Iskandar Malaysia to selected invitees over the weekend.

- This forms part of Phase 1 of The Meridin totalling 756 units (three blocks) with an indicative GDV of RM550mil.

- Some 400 units under Block A – comprising one- to four bedroom variants with options for balcony extensions – were offered during the preview. Built-ups range from 520sf to 1,500sf.

- Out of this total, Mah Sing achieved bookings for 108 units for the residential units. Another five out of 30 retail units were taken up at an average pricing of RM1,000psf (871sf – 5,830sf).

- The starting price points have since been raised to RM630psf-RM780psf from an average of RM550psf when it was first unveiled in October 2012.

- Following this, the project would be open to the public for balloting in May 2013. A series of overseas roadshows are also on the cards, with Singapore being the first stop.

- The remaining phases would consist of more residential units, a retail podium and other commercial features that may include a hotel to add vibrancy to its overall development footprint.

- After making a good head-start, we believe that The Meridin would continue to do well. Firstly, there will likely be more headroom for a step-up in prices for its future launches – with prices at Puteri Harbour and select locations within JB City (e.g. Danga Bay) already moving towards the RM900psf-RM1,000psf range.

- Secondly, we expect strong end-demand for these suites – including the all-important Singapore market. This comes from its:- (i) Iconic view of Legoland for certain units; (ii) Strategic location (close proximity to various catalyctic projects within Medini North); and (iii) Exemption from the RM500k minimum threshold for foreign buyers.

- We expect Mah Sing to enjoy healthy margins – circa 25% at the PBT level – for which it will be exempted from corporate tax for 10 years as well as enjoy a slew of other special incentives, due to it being qualified for Iskandar Development Region (IDR) Status.

- There were also earlier plans to sell the hotel en-bloc. This move, to us, would help reduce overall development risk and unlock some project cash flow upfront.

Source: AmeSecurities