Mah Sing Group Berhad (MAHSING, 8583) continues to solidify its position as a leading property developer in Malaysia, with a diversified portfolio. Recently, the company has made significant strides by venturing into the data centre (DC) industry, underscoring its commitment to innovation and growth. Based on our estimates, the data centre business is expected to contribute RM60m EBITDA for MAHSING in FY26. BUY with a target price of RM2.23 based on SOP (Sum of Parts) valuations.

In July 2024, MAHSING acquired 6.17 acres of prime land in Taman Desa, Kuala Lumpur, for RM108m. The development, estimated to have a gross development value (GDV) of approximately RM1.01bn, will be executed in two phases: M Aspira, featuring around 1,600 residential units on 3.7 acres, and Residensi Madani, with approximately 800 units on 2.47 acres. Set to open for registration in 3Q2024, M Aspira will offer modern, well-designed homes aimed at urbanites, first-time homebuyers, and foreign buyers, integrating MAHSING’s hallmark lifestyle concepts. The project is expected to be well received, thanks to its prime location less than 10km from KL city centre.

In a strategic turn towards the technology sector, MAHSING has announced a collaboration with Bridge Data Centres Malaysia (BDC) to develop a 100MW data centre facility on 17.55 acres of land in Southville City, Bangi, Selangor. This venture marks the company's entry into the data centre segment, with plans to eventually expand to a 500MW capacity across a 150-acre site. Management has indicated that the company is already in talks with regional DC players.

The recent global IT infrastructure disruption, which impacted major systems like Azure and CrowdStrike, has highlighted the urgent need for comprehensive data centre strategies. This unfortunate situation presents a timely opportunity for MAHSING’s newly launched DC hub. In this collaboration, MAHSING will contribute the land in exchange for an estimated 20% stake in the JV. This development positions MAHSING at the forefront of the growing demand for data centre services, driven by increasing digitalisation and IT infrastructure needs.

MAHSING is confident in achieving its sales target of RM2.5bn, with RM992m already achieved by May 2024. We expect MAHSING to register net earnings of RM244.3m and RM275.4m for FY24 and FY25 respectively, underpinned by strong unbilled sales of RM2.32bn (as of 1QFY24) and higher revenue recognition from the completion of several current projects. The company’s balance sheet remains manageable with a net gearing ratio of 0.1x for the same period.

Source: Rakuten Research - 5 Aug 2024

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