Mah Sing - Expanding Presence in Johor; BUY

Date: 
2024-04-08
Firm: 
RHB-OSK
Stock: 
Price Target: 
1.58
Price Call: 
BUY
Last Price: 
1.41
Upside/Downside: 
+0.17 (12.06%)
  • Maintain BUY with higher MYR1.58 TP from MYR1.55, 25% upside and 4% yield. We are upbeat with Mah Sing’s new land acquisition for township development. Land cost is reasonable at only 7.2% of the MYR1.45bn GDV. Meanwhile, the response for its recent M Minori project at Taman Seri Austin was overwhelming, whereby all 252 non-bumiputra (bumi) units in Tower A were fully sold. Confidence is further boosted by the strong registration of interest for M Tiara 1, which will be rolled out in mid-2024.
  • Another parcel of land in Pulai. Mah Sing announced another land acquisition from the same vendor for M Tiara 1, ie AmanahRaya (being the administrator for the estate of Almarhum Tunku Zanariah Ahmad). The acquisition will be funded via internal funds and borrowings – Mah Sing should have ample capacity given its net gearing of only 0.08x as at 4Q23. The land deal is expected to be completed in 2H24.
  • Land cost is similar to the previous parcel. Recall: The M Tiara 1 land was acquired in Jun 2023 (75.7 acres at MYR76.1m or MYR23psf). The purchase consideration of MYR103.75m for this new parcel of land translates to a land cost of MYR23.72psf, just slightly higher than the previous parcel, which is just 400m away. The area, which is near to the Malaysia-Singapore Second Link, is surrounded by matured neighbourhoods such as Mutiara Rini and Lima Kedai, as well as various schools and amenities.
  • MYR1.45bn GDV for the new land. Compared to M Tiara 1, which comprises double-storey terrace houses and cluster homes (with indicated unit prices from MYR624,800), M Tiara 2 is positioned as the upgraded version of this development. It will offer larger and low density terrace houses and cluster homes, priced from MYR771,600 onwards.
  • Strong response for new projects in Johor. Management’s confidence is very much boosted by the strong response from its recently launched projects. M Minori in Taman Seri Austin, which was launched in Nov 2023, received overwhelming response. Tower A’s 252 units of non-bumi lots were fully sold over one weekend. Meanwhile, M Tiara 1 received 5,000 registrants of interest in <10 months for its upcoming launch of 754 units of landed homes. Coupled with the proposed rail infrastructure projects that may be developed in Iskandar Malaysia, as well as the proposed Johor-Singapore special economic zone, Mah Sing’s acquisition of this parcel of land at a rather reasonable price is considered a strategic move.
  • Higher TP. We raise our FY25F-26F earnings slightly by 2-3%. Our SOP- based TP is based on 35% discount to RNAV and 0% ESG discount/premium, given Mah Sing’s 3.0 ESG score, which is the same as the country median.

Source: RHB Research - 8 Apr 2024

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