Mah Sing has acquired 2.78 acres of freehold land in Sentul, Kuala Lumpur, for RM32.0mn, marking its first land acquisition in 2025. This newly acquired land is planned for a high-rise development with an estimated GDV of RM283mn. Overall, we are optimistic about this acquisition, given its strategic location and reasonable acquisition price (land cost to GDV ratio of 11%). Maintain Buy with an unchanged TP of RM2.41/share, based on SOP valuation.

Buying 2.78 acres of freehold land in Sentul for RM32.0mn

Mah Sing has announced its first land acquisition of the year, securing 2.78 acres of freehold land in Sentul, Kuala Lumpur, for RM32.0mn (or equivalent to RM264.30psf). Strategically situated just 5km from the city centre, the site offers excellent connectivity via major highways such as the DUKE Highway (1.5km away) and the Middle Ring Road 2 (4.3km away). Additionally, public transportation options are abundant, with the Sentul Timur LRT Station located 3km from the site and three KTM stations—Sentul, Kampung Batu, and Batu Kentonmen—within a 2.5 to 3.5km radius.

See Appendix 1 for the location of the land.

High-rise development with a potential GDV of RM283mn

The preliminary plan for the new development, to be named M Aria, estimates a total GDV of approximately RM283mn. Planned as a high-rise project with a development period of four years, M Aria will feature apartment units in various configurations, including 3-bedroom and 4-bedroom layouts. The indicative built-up areas are expected to range from approximately 800 sq. ft. to 950 sq. ft., with starting prices for the most affordable units anticipated at RM498,000.

In line with the group's quick turnaround strategy, the management plans to roll out an awareness program and open registrations of interest for M Aria in the second half of 2025, subject to authorities’ approval. M Aria is designed to appeal to first-time homebuyers, upgraders, and working professionals seeking a city-centric lifestyle with excellent accessibility, modern amenities, and welldeveloped infrastructure.

Positive on the Deal

Based on the estimated GDV of RM283mn, the land cost makes up 11% of the total development value. Given that the land cost to GDV ratio falls below the standard 20% rule, we consider the acquisition price to be reasonable.

The acquisition aligns with Mah Sing’s strategy of securing prime land in Greater Kuala Lumpur and Johor to expand its M-Series, the group’s signature range of affordable developments. Demand for affordable homes in urban areas remains robust, as evidenced by the strong take-up rate exceeding 90% for Mah Sing's M-Series launches.

Building on the success of fully sold-out developments like M Centura and M Arisa in Sentul, M Aria will be Mah Sing's third project in the area. This new addition is expected to further strengthen the group’s foothold in Sentul by capitalising on the strong demand generated by its previous projects. We believe Mah Sing’s deep understanding of Sentul’s high-demand catchment area provides a competitive edge in efficiently marketing and developing the land.

Following this acquisition, Mah Sing’s landbank will increase to 2,415 acres, with a remaining GDV of RM28.8bn. In terms of funding, Mah Sing's robust balance sheet with a net gearing of 0.2x and a cash balance of RM747mn as of Sep 2024, positions the company well for more land acquisitions in the future. According to the announcement, the acquisition is expected to be completed in the second half of 2025.

Impact

No change to our FY24-26 earnings forecasts for now, pending the completion of the acquisition.

Valuation

We maintain our Buy recommendation with an unchanged TP of RM2.41/share, based on SOP valuation.

Source: TA Research - 22 Jan 2025