• Maintain BUY and MYR2.26 TP, 39% upside and c.3% yield. 2Q24 results were within expectations. We expect news flow of its investment in the data centre (DC) segment to continue driving investor interest in the stock. Following the 100MW with Bridge DC, Mah Sing is now in advanced negotiations for the next plot of land in Southville DC Hub (capacity: 90MW). In Johor, about 42.5 acres of land in Meridin East could be up for sale to a DC player as well. Substantial land sale gain could be booked in FY25F.

• 2Q24 results. 2Q24 revenue and earnings remained steady from 1Q24. 1H24 revenue fell, mainly due to a high proportion of new projects at the initial stage of construction. The better growth in 1H24 EBIT, however, was largely due to better margin and narrowing losses from the manufacturing segment compared to the same period last year. The manufacturing segment incurred an operating loss of MYR1.2m vs a profit of MYR0.65m in 1Q24, as the previous quarter saw the recognition of insurance recoveries of MYR2.7m (related to a fire incident in the past). Net gearing inched up to 0.1x from 0.06x in 1Q24.

• Steady sales in 2Q24. 2Q24 property sales achieved MYR650m vs MYR595m in 1Q24. 8M24 total property sales already hit MYR1.66bn, of which MYR1.25bn were mainly contributed by M Minori in Johor (MYR331m), M Zenya (MYR281m), Meridin East (MYR271m) and M Senyum (MYR121m). In addition to the bookings in hand worth MYR259m, given the healthy pipeline launches which include M Azura in Setapak, M Tiara linked homes in Johor Bahru, M Aspira in Taman Desa as well as the maiden launch of M Legasi in Semenyih (Glengowrie land), Mah Sing should be able to hit its MYR2.5bn sales target by year end. In our view, the landed homes in Iskandar Malaysia and Semenyih should be well-received.

• Recent concerns on tighter approval requirements. It was reported that the authorities will no longer approve projects until a geotechnical study report prepared by certified engineers is obtained. Mah Sing clarified that it has already obtained development order (DO) for all its projects in Kuala Lumpur, as geotechnical studies prepared by certified engineers have already been accepted by the relevant authorities prior to the DO approval.

• Forecasts. We maintain our earnings forecasts. Unbilled sales rose to MYR2.43bn vs MYR2.32bn as at 1Q24.

• Maintain TP. Our SOP-based TP is based on a 30% discount to RNAV for the property segment, and 15x EV/EBITDA for the investment in DC with Bridge. It also includes a 0% ESG premium/discount as Mah Sing’s ESG score is 3.0.

Source: RHB Research - 2 Sep 2024