• Maintain BUY and MYR0.75 TP, 25% upside with c.6% FY23F yield. We are upbeat on Mah Sing acquiring new land in Johor. The land is in a matured area, and new landed homes should be well-received upon the launch of the project in 2H24. We expect the group to ramp up its landbanking activities in the coming months, as some of its M Series projects are already approaching the end-phase of their development.

• New township land in Johor. In line with management’s guidance earlier on its landbanking plan, Mah Sing recently announced its second land acquisition YTD. Located at Pulai, Johor Bahru, the new 75.7-acre freehold land was acquired from Amanah Raya (administrator of the Estate of Almarhumah Tunku Zanariah Ahmad) and Mutiara Kiara Properties. The acquisition, which is expected to be completed in 1H24, will be funded via borrowings and internal funds. Mah Sing has a net gearing of 0.20x as at 1Q23.

• Reasonable land cost in a matured area. Given the purchase consideration of MYR76.1m, the land cost of MYR23 psf is considered reasonable, equivalent to just 16% of its estimated GDV of MYR480m. The land, located in a matured area near the Malaysia-Singapore Second Link bridge (9.8km away), is close to a few established townships such as Mutiara Rini and Lima Kedai, various schools and higher learning institutions, as well as hypermarkets (Lotus’s and Mydin Mall Johor Bahru).

• MYR480m GDV for the land. The new land is planned for a landed residential property development called M Tiara. It will comprise double- storey terrace houses and cluster homes, with indicative prices of MYR624,800 per unit and upwards. This is in line with the going market price for similar properties in the vicinity. Registration of interest is targeted to be in 1H24.

• We maintain our FY23-25 earnings forecasts, as we expect this project to have a minimal impact on Mah Sing’s FY25 earnings, due to slow progress billings at the initial stage of construction. The group’s unbilled sales currently stand at MYR2.26bn.

• Maintain TP. This new parcel of land will have a marginal impact on our RNAV estimate. Our SOP-based TP includes a 0% ESG discount/premium applied, as our ESG score of 3 out of 4 for this company is on par with the country median, as per our in-house proprietary methodology.

Source: RHB Research - 14 Jun 2023