• Maintain BUY and MYR0.77 TP, 25% upside with c.5% FY23F yield. Among the developers under our coverage, Mah Sing has been the most active one in landbanking this year. Including yesterday’s land deal, the company has spent MYR639m on acquiring new land. We believe that it should be able to cope with the financing of all acquisitions, given the expected FCF generated upon its handover of upcoming projects (MYR500m and MYR440m for FY23-24F).

• Scores fourth land deal in 2023. Mah Sing announced that it has entered into a JV agreement with Liberty Triangle (three directors: Tengku Baharuddin bin Tengku Bahadur, Datin Seri Utama Nafesah Raja Nong Chik Abidin and Datuk Seri Utama Raja Nong Chik bin Raja Zainal Abidin) for the proposed JV, to undertake the development of two pieces of land in Kepong. The land has a total area of 4.88 acres and payment for the total consideration of MYR85.3m will be made on a deferred and staggered basis (8% deposit, 62% within three months, 12% within 18 months and 18% upon completion of the project). The purchase will be funded by Mah Sing’s internal funds and bank borrowings.

• Details of the land. The consideration translates into a land cost of MYR401psf, which is on par with the price Mah Sing paid for the M Luna land in 2019. The land comes with approved development order (DO), with one of the DO approved with a plot ratio of 1:6. The land title has also been converted with the category of land use “Bangunan” (ie building), while the land premium has been paid and earthworks are partly completed. This new land will be Mah Sing’s fourth project in the Kepong area after Lakeville Residence (completed), M Luna (fully-sold) and M Nova (to be launched in 2H23). These three projects are all within a 5km radius from the new land.

• New project with MYR500m in GDV. Mah Sing will develop the land into a mixed residential project under its M-series brand, and name it M Zenya. This will comprise retail lots and serviced apartments with an indicative built- up area of 718-1,067sqf each. Indicative prices are MYR420,000 and upwards – similar to the pricing for its M Luna and M Nova projects. As the land has a direct frontage along the Kepong Metropolitan Lake and is next to the Keponggi Square commercial development, we believe M Zenya will be well-received upon its launch (registration of interest will start in 2H23).

• We make no changes to our FY23-25F earnings, as initial billings from the high-rise project should be rather minimal. Mah Sing’s unbilled sales amounted to MYR2.26bn as at 1Q23.

• Valuations. Our SOP-based TP is based on an unchanged 65% discount to RNAV for the property arm, 7x FY23F P/E for the plastics business, and 5x FY23F PE for glove manufacturing unit, with a 0% ESG discount/premium applied.

Source: RHB Research - 7 Jul 2023