KEY INVESTMENT HIGHLIGHTS

• Second JV deal with Bridge Data Centres
• Growing DC portfolio
• Earnings forecast maintained
• Maintain BUY with a revised TP of RM2.01

Second JV deal with Bridge Data Centres. Mah Sing Group (Mah Sing) announced that Southville City Sdn Bhd, a wholly owned subsidiary of Mah Sing had on 28th October 2024 entered into a second collaboration agreement with Bridge Data Centres Malayai Vll Sdn Bhd ("BDC") for the joint venture development of data centre(s), facilities and infrastructure on another 2 parcel of lands measuring approximately 35.68 acres for 200MW power capacity within the Mah Sing DC Hub @ Southville City.

Recall that Mah Sing signed first collaboration with BDC on 17.55 acres of land on 30 May 2024. Note that BDC is a leading provider of data centre solutions across Asia Pacific.

Growing DC portfolio. We view the second JV with BDC positively as it will increase recurring income of Mah Sing. We understand that the Mah Sing is likely to have equity stakes in the JV, similar with the structure for first JV deal. That will allow Mah Sing to ride on the booming demand for data centre in Malaysia. The first JV was on 17.55 acres of land with power capacity of 100MV while the new agreement adds an additional 200MV power capacity on 35.68 acres of land. That will increase total power capacity to 300MW. Note that the 150-acre Mah Sing DC Hub @ Southville City could offer up to 590MW capacity. Besides, the data centre JV will also unlock value of landbank at Southville City. Note that first data centre JV was based on land value of RM160psf while the land value for second data centre JV is higher at RM200psf. Overall, Mah Sing is expected to recognise land sales gain from the data centres ventures.

Earnings forecast maintained. We make no changes to our earnings forecast for FY24F/25F/26F as the second data centre is targeted to commence gradual operations starting in FY26. Meanwhile, earnings prospect for Mah Sing remains positive which will underpin by the higher property sales of at least RM2.5b for FY24 as demand for affordable house remains resilient.

Maintain BUY with a revised TP of RM2.01. We revise our TP for Mah Sing to RM2.01 from RM1.97 as we narrow RNAV discount to 13% from 15% in view of better earnings visibility from data centre venture.

Meanwhile, Mah Sing has 42.52 acres of land in Meridin East which is also suitable for data centre development. Overall, we maintain our BUY call on Mah Sing as we remain positive on Mah Sing as new sales prospects will be supported by strong buying interest on affordable residential projects.

Source: MIDF Research - 29 Oct 2024