- We maintain our BUY call on Mah Sing Group with an unchanged fair value of RM4.00/share (at 10% discount to its NAV). We visited the site of Mah Sing’s latest acquired prime land in Puchong (~89 acres), and came away feeling more upbeat with its future prospects.

- Firstly, we deem the land cost (RM657mil or c.RM170 psf) as fair given its deep development appeal. The said land –located just behind IOI Mall – is believed to be among the few last tracts of sizeable land within Puchong’s CBD.

- Including another 171 acres of MoU land located next to the existing land, Mah Sing has access to ~260 acres of prime land in Puchong that can be remodeled into an integrated mixed-development project – Mah Sing’s single-largest project to-date.

- By extension, the GDV of the first 89 acres of the Puchong land is c.RM9bil (development period: 10 years); it could rise by another RM16bil to a combined GDV of ~RM25bil if the MoU is crystallised.

- Leveraging on its early successes for Icon City and Lakeville Residence@Taman Wahyu, we believe Mah Sing has the necessary pedigree and fortitude to replicate its winning formula with this new Puchong land.

- To be sure, we understand that the maiden launch could happen by 2H15 – starting with executive suites at a starting price of RM585k (~RM650psf) against the average price of ~RM600psf-RM900psf for mostly newly completed projects nearby.

- We estimate a catchment of over 1 million potential buyers from the existing matured townships within Puchong, USJ, Subang and PJ alone.

- Its development momentum should gain further traction once the proposed infrastructure improvements within its vicinity are completed, starting with the LRT extensions by 2016.

- Funding terms are staggered: 10% is to be paid upon the signing of SPA with the balance 90% stretched over four years. Furthermore, parts of these could be funded via presales from the project’s initial launches – starting with its serviced apartments.

- The Puchong land will boost Mah Sing’s GDV pipeline to c.RM50bil (RM66bil if the MoU land is crystallised), solidifying the group’s position as one of the largest Malaysian developers by GDV. We believe development margins of c.30% are achievable, given the project’s robust prospects.

Source: AmeSecurities