Mah Sing Group Bhd (Mah Sing) has a total remaining GDV (gross development value) of about RM25bn on 2,333 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 RM1.03 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 3.4sen and 3.6sen for FY23-FY24 translating into yields of 4.5% and 4.7% respectively.

Mah Sing has acquired several land banks in 2023 with a combined GDV of about to RM5.0bn. 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. In June 2023, the company acquired 75.7-acre freehold land in Pulai, Johor Bahru for RM76.1m for landed residential properties namely M Tiara which has a GDV of RM480m and 500 acres of freehold land in Semenyih with an estimated GDV of RM3.3bn for an integrated township development comprising of mainly double-storey landed homes with indicative prices starting from RM446,800, to be named Glengowrie Estate.

Mah Sing made its 4th acquisition in 2023 which is a 4.88-acre residential development in Kepong, Kuala Lumpur, with a total estimated GDV of RM500m. The new development, named M Zenya, will build on the success of Lakeville Residence, M Luna and M Nova in Kepong. The company’s latest launches namely M-Nova Kepong is well received with 90% take up rate for its Tower A. Meanwhile MVertica Cheras, M Adora Wangsa Melawati have been completed in April and August respectively, well ahead of their schedule.

Mah Sing is confident to achieve its minimum sales target of RM2.2bn whereby RM1.2bn were already achieved in 1HFY23. Additionally, 2023 and 2024 will see the completion of several projects which will generate free cash flows amounting to RM420m and RM530m respectively. We expect Mah Sing to register net earnings of RM209.5m and RM221.9m for FY23 and FY24 respectively underpinned by strong unbilled sales of RM2.34bn and higher revenue recognition in 2HFY23. The company’s balance sheet is manageable with net gearing of 0.1x as at 1HFY23.

Source: Rakuten Research - 1 Sept 2023

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