Highlights

• We are reiterating our view on Mah Sing after meeting the management for updates on its township in Bangi, Southville City @ KL South.

• The 428 acres of freehold land will be well -developed with plans to preserve its greeneries as only half of the total acreage will be developed into a mixed development, along with township amenities such as schools, clubhouses and urban parks. The GDV for the entire development is estimated at RM8.3bn.

• Currently there are two main roads access into Southville City, which are Jalan Kajang Dengkil and the Direct Interchange form North-South Highway that will be undertaken by the group.

• The group shared that the interchange would include a toll plaza (rates unknown for now), a maiden project being carried out by a property developer. It would be a 14 lanes toll (8 lanes in and 6 lanes out).

• The entire development is expected to complete only in 2022-2025 given the large land space, separated into a total of 7 launches.

• Residential developments will be launched in 3 phases (High-rise executive suites, 2.5-3-storey link houses and landed riverfront exclusive homes). Other launches would inc lude commercial plaza, boutique office towers, commercial hub and wellness city.

• Mah Sing have recently launched the 7 th tower (D1) early of the month with pricing from RM486,000 onwards. Do note that the pricing for its maiden launch of Savanna was as lo w as RM348,000. To date, we gather that the total take-up rate reached 82% or 2,235 units for all 7 towers launched.

• For Avens Residences (2.5-3-storey link houses), selling prices have appreciated to at least RM900,000 and RM1m for 2.5-storey and 3-storey link houses, respectively. Total take-up rate is 69% or 135 units. We understand that the group have only launched a portion of Avens 3-storey link houses.

• Overall, Mah Sing targets to achieve sales of RM920m (FY14: RM803m) for Southville City alone out o f total RM3.43bn target in FY15, making the development the major contributor to the group for the year.

Risks

• Slower than expected sales
• Execution risks for projects
• I nability to replenish landbank.

Forecasts

• Maintained.

Rating

• BUY
• MSGB currently trades at 8.6x FY15E P/E vs. its historical 5-year P/E average of 11.1x

Valuation

• TP maintained at RM2.42 (maintain 25% discount to RNAV), which values MSGB at 8.9x FY15E P/E, vs. its historic al 5-year P/E average of 11.1x . Maintain BUY.

Source: Hong Leong Investment Bank Research - 26 Mar 2015