We  raise  our  FV  to  MYR2.44.  Mah  Sing  is acquiring  a 76.4-acre  land in Jawi  for  MYR42.6m.  We  consider  the  land  cost,  at  MYR12.80  psf,  as reasonable  given  its  location  opposite  the  Bukit  Jawi  Golf  Resort  and about 30 min to Penang Second Bridge. Although we are positive on the purchase,  we  remain  Neutral  on  the  stock  as  the  cooling  measures announced by the state government will delay the sector’s recovery.

- Venturing  into  Penang  mainland.  Mah  Sing  has  announced  the acquisition  of  76.4  acres  of  freehold  land  in  Jawi  for  a  purchase consideration of MYR42.6m. The acquisition was expected given that the bigger  players  such  as  Ecoworld  and  IJM  Land  (IJMLD  MK,  BUY,  FV: MYR3.70)  all  bought  land  parcels  in  Seberang  Perai  Selatan  this  year. Mah Sing’s land is now planted with oil palm trees while some areas are being occupied by a poultry farm. According to management, 63 acres of the land is of Grade A status, while the remaining 13 acres will require a conversion premium of about MYR1.1m (or about MYR2 psf).

- Players  snapping  up  land.  We  deem  the  land  cost  of  MYR12.80  psf reasonable  considering  the  location  of  the  land,  compared  with Ecoworld’s land in  Jalan  Paboi  (purchased  at  above  MYR30  psf)  and IJMLD’s land near Jawi Toll (MYR18.50 psf).  Mah Sing’s land is about 15 min from the Jawi Toll and 30 min to the Penang Second Bridge.  

- Southbay  East  worth  MYR400m.  The  company’s acquisition  is  timely given  that  the  Second  Bridge  will  open  in  1Q14.  The  proposed development,  which  will  be  named  Southbay  East,  has  an  estimated GDV  of  MYR400m  and  will  be  developed  over  a  3-4  year  period.  The indicative pricing for the project’s linked houses is less than MYR500k.    

- Maintain NEUTRAL. We make no changes to our earnings forecasts as first launch is targeted in 1H15. Given the incremental value in our RNAV estimate, we raise our FV slightly to MYR2.44 (from MYR2.42), based on an  unchanged  15%  discount  and  maintain  our  Neutral  rating  on  the stock. The Penang state government has just  announced more housing policies  such  as  the  2%  levy  on  properties  sold  within  three  years,  and limiting  the  sale  of  affordable  houses  (<MYR400k  on  the  island  and <MYR250k on the mainland) only to eligible first-time home buyers in the state housing department’s list of registered buyers within the first five years. While the impact is not significant, the imposition of more cooling measures will delay the recovery in property buyers’ sentiment.

Financial Exhibits

Financial Exhibits

SWOT Analysis

Company Profile

Mah  Sing  has  many  projects  across  the  key  states  in  Malaysia.  The  company,  which  adopts  a  fast  turnaround  model  in  property development, has both niche and township projects to underpin its earnings.

Recommendation Chart

Source: RHB