Mah Sing Group Bhd (Mah Sing) being one of the premier property developers in Malaysia has a total remaining GDV (gross development value) of about RM24bn on 2,000 acres of landbank. 65% of the company’s launches are priced below RM500k. Mah Sing has launched several projects in the past 3 years with strong take up rates. BUY with a target price of RM0.98 based on SOP (sum of parts) valuations. Mah Sing has been paying dividend of at least 40% of net profit for the past 15 years. We are forecasting the company to pay dividend of 3.5sen and 3.7sen for FY23-FY24 translating into yields of 5.7% and 5.9% respectively.

Mah Sing has acquired several land banks in the past 3 years with a combined GDV of close to RM4.2bn. In January 2023, the company purchased an 8-acre landbank at TED Puchong, which will be catered for 2 projects, namely M Tera 1 and M Tera 2. These projects will provide additional GDV of RM726m.

Based on preliminary plans, M Tera 1 will be a residential development with indicative built up size of between 552sq. ft. and 1,005 sq. ft. comprising of 2-3 bedrooms with starting price from RM250k. Meanwhile M Hana will be a mixed development. Both projects are targeted for registration in 2H2023. We believe both projects will be well received given their attractive selling price and good location. Proximity to 2 LRT stations, the projects will be easily accessible via LDP, KESAS, MEX, LKSA and NPE highways. Amenities include several primary and secondary schools, colleges, hospitals and shopping complexes.

Mah Sing launched 3 projects in 2022 namely Camelia 2 @ M Senyum, Salak Tinggi, Phase 1A @ Panora, Rawang and 1st Tower @ Astra, Setapak. These projects have achieved strong take up rates of 97%, 100% and 95% respectively.

Mah Sing achieved its 2022 sales target of RM2.0bn and the company has set a target of RM2.2bn for 2023. In addition, 2023 and 2024 will see the completion of several projects which will generate free cash flow amounting to RM424m and RM530m respectively.

Our BUY recommendation is premised on: (i) strong sales achieved in the past few quarters with unbilled sales of RM2.3bn; and (ii) decent dividend yields.

Source: Rakuten Research - 9 Feb 2023

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