MAHSING is acquiring 6.2 acres of land in Taman Desa, Kuala Lumpur, for RM108.7m cash, to be developed into high-rise residential units with an estimated GDV of RM1.0b. We believe it is paying a fair price for the land. We maintain our forecasts but raise our TP by 0.5% to RM1.88 (from RM1.87). Maintain MARKET PERFORM.

Third land purchase in FY24. MAHSING is acquiring 6.2 acres of land in Taman Desa, Kuala Lumpur, for RM108.0m or RM402 per sq ft (psf). It will develop high-rise residential units on the land with a GDV of RM1b. The development will be carried out in two phases via: (i) M Aspira comprising approximately 1,600 units on 3.7 acres, and (ii) Residensi Madani comprising approximately 800 units on 2.47 acres. M Aspira is set to open for registration in 3QCY24, with starting prices from RM448K.

At RM402 psf, we believe MAHSING is paying a fair price considering asking prices of c.RM400-450 psf in the vicinity.

In terms of its indicative starting price at RM448K of an apartment sized 708sf (RM633psf) for residential apartment, we see reasonable pricing points when compared with the listed asking prices of approximately RM480K-RM550K for residential apartments within the vicinity, as seen on property online portals.

Overall, we are slightly positive as the intended development is fairly- priced within a highly sought-after address in a mature area, allowing for quick monetisation.

Forecasts. Maintained as the project is unlikely to contribute within our forecast period.

Valuations. We raise our TP by 0.5% to RM1.88 (from RM1.87), having reflected enhancement from the latest project. We continue to value MAHSING at a 30% discount to RNAV, which is narrower than the industry’s average of 55%. This is to reflect the strong realisability of its GDV backed by its quick turnaround development strategy. There is no adjustment to our TP based on ESG given a 3-star rating as appraised by us (see Page 6).

Investment case. We like MAHSING for: (i) its focus on affordable products targeting first-time house buyers, and (ii) sound land bank management and turnaround which minimises carrying costs, (iii) a strong war chest for land acquisitions underpinned by a clean balance sheet, and (iv) more significant recurring income stream following the venture into data centre. However, these have been priced in by the market. Maintain MARKET PERFORM.

Risks to our call include: (i) persistent overhang in the high-rise segment, (ii) widening losses at its glove division due to persistent oversupply, and (iii) sustained elevated inflation and mortgage rates, hurting affordability.

Source: Kenanga Research - 4 Jul 2024