• Maintain BUY, new MYR1.12 TP from MYR0.98, 19% upside and 4% yield. We are upbeat on Mah Sing’s latest land acquisition in Sepang, which is planned for Mah Sing Business Park’s development. Apart from the land’s reasonable pricing, the company’s collaboration with a Chinese party should also ensure promising take-up of industrial properties in this project, in our view. Our higher TP reflects the incremental value from the new industrial project to our RNAV estimate, as well as a lower discount to RNAV given better market sentiment.

• The land and collaboration. Mah Sing entered into a conditional sale and purchase agreement with Premier Land Resources (under Yuwang Group, a private plantation firm) to acquire 561.65 acres of leasehold agricultural land in Sepang. The acquisition involves an initial parcel measuring 185 acres with a purchase consideration of MYR100.7m (or MYR12.50psf), and comes with an option to purchase the 376.65-acre balance in adjacent parcels within four years at the same land price of MYR12.50psf (188 acres within two years and the 188.65-acre balance within four years).

• The collaboration. The land will be jointly developed by Mah Sing South Sea Industrial Development (MSSSID; 80%) and the landowner (20%). MSSSID is a JV between Mah Sing (70%) and The South Sea Capital (30%) by Sun Jian Wei, who is Malaysia Jiangsu Entrepreneurs Business Association’s executive president. Leveraging on Sun’s established network with potential investors from Jiangsu Province and neighbouring Shanghai, as well as Mah Sing’s profile in the plastics manufacturing sector, we believe this new business park will see encouraging take-up upon its launch in 2H24.

• Details on the project. The land is located in Sepang. It is only 10km from the Kuala Lumpur International Airport (KLIA). Reputable logistics hubs – such as Cainiao Warehouse by Alibaba Group, POS Aviation E Commerce Hub, and DHL Global Forwarding – are in the vicinity. The site is also wellconnected via major highways such as KLIA Expressway, ELITE Highway, North-South Expressway, etc. Surrounding amenities include the ERL Salak Tinggi Station and KIP Mall in Kota Warisan, and some other education institutions. Mah Sing Business Park, with a GDV of up to MYR2bn for the entire 561.65 acres, comprises customised factories, industrial lots, cluster, and semi-detached and detached factories catering for medium and light industrial activities.

• Maintain BUY. Impact to our FY25F earnings is minimal. Our new TP is now based on a 50% discount to RNAV from 55%, given improving sentiment in the property market.

Source: RHB Securities Research - 2 Feb 2024