Highlights

We paid a site visit to MSGB’s newly launched township in Southville City, Bangi, and came away impressed by its ambitious concept. Key takeaways:

Catering to first-time buyers. We believe MSGB has consciously positioned Phase 1 (35 acres, RM1.3bn of GDV) to be catered to young working adults working in Greater KL who are looking to own their first home. The pricing point is attractive, ranging from RM318-339k per units (RM330 psf). Given the high house prices in the established areas, Bangi would serve as a logical compromise for this demographic given that it is just 25km from the city and is served by the KL-Sg Besi highway.

Phase 1 offers the complete package. We also like the product mix for the inaugural phase. It will be a 28-floor residential block (3192 units) sitting atop a large shopping podium (208 units). We understand MSGB will be dictating the trade mix that would be allowed in the retail lots, to benefit the residents.

Creating a new “centre of gravity”. This is a large-scale, green-field development, spanning 420 acres and RM5.1bn GDV, and is estimated to take 10 years to completed. It will have both high rise and landed residential units, to be complemented by retail and educational elements to make it a self-contained township. We believe it is this holistic offering that has served to attract more than 19,000 registrants for Phase 1 (3192 units), and will also serve to bring in more new population and developments to the locale.

More to come. Phase 2 will be landed units, called Garden Link Homes, with pricing started from RM800k per unit. In addition, we gather that MSGB will seek to expand its landbank in the vicinity, as it is bullish about the prospects of Bangi, which enjoys a strong industrial base, with MNCs such as Sony and Hitachi having factories there.

No DIBS. We learnt another interesting development in the sector – Mah Sing have been influenced by Bank Negara’s “moral-suasion” stance on DIBS, and will not be offering any more DIBS on both Southville and its future projects.

Risks

Slower than expected sales; execution risks for projects; inability to replenish landbank.

Forecasts

Maintained.

Rating

HOLD

Given macro and sector headwinds, we are keeping our HOLD call on Mah Sing at this point in time.

Valuation

Maintained at RM2.10 (45% discount to RNAV).

Source: Hong Leong Investment Bank Research- 18 Sep 2013