• BUY, TP rises to MYR0.77 from MYR0.75, 28% upside with c.6% FY23F yield. We are upbeat on Mah Sing’s latest land acquisition. Its development there will feature affordable landed homes targeted towards the middle income segment. We think the products should be well-received, as they will be competitively priced. Our new TP is based on an unchanged 65% discount to updated RNAV, given the incremental value from the new land.

• Third land acquisition YTD. Mah Sing has entered into three sale and purchase agreements (SPA) with SP Setia (SPSB MK, NEUTRAL, TP: MYR0.60) for the proposed acquisition of 500 acres of freehold land in Semenyih, for a purchase consideration of MYR392.04m. A 10% deposit was paid upon the signing of the SPA, and the remainder will be paid in 2Q24 (ie when the transaction is completed). Mah Sing plans to fund the acquisition via a combination of internal funds and bank borrowings – net gearing stands at 0.20x as at 1Q23. The proposed acquisition is not subject to shareholders’ approval, but will require the green light from the Estate Land Board (to transfer the land to the buyer) and Economic Planning Unit.

• The land cost of MYR18psf is reasonable, as the development charge, Improvement Service Fund and part of Integrated Water Supply Scheme costs have been paid for by the vendor. Part of the external infrastructure has also been completed. The land sale by SP Setia is within our expectation – it has been selling land as part of its de-gearing exercise.

• New township project worth MYR3.3bn in GDV. The land is located at the south of Eco Forest and to the east of Bandar Tasik Kesuma. It is easily accessible via the Kajang-Seremban highway (LEKAS), and surrounding amenities include Tenby International School Setia Ecohill (6.7km), some international schools and Nottingham University (4.8km). The land is planned for an integrated township with double-storey landed homes – indicative prices start from MYR446,800 per unit. Management also aims to kick off its awareness programme and registration of interest in 2024.

• Selling bread-and-butter landed housing. This new township project, named Glengowrie Estate, should be well-received. Although the new land is surrounded by a few other developments – EcoForest, Setia Mayuri, and Diamond City – we understand that Mah Sing’s products will be more affordable, being targeted towards the middle-income group. It is also a continuation of the company’s M Senyum project in Sepang, as this project is already halfway through its development.

• We maintain our FY23-25F earnings. Initial contributions from this new project should be minimal. Current unbilled sales amount to MYR2.26bn. Our TP includes a parity discount/premium, as Mah Sing’s ESG score is on par with the country median.

Source: RHB Securities Research - 20 Jun 2023