KEY INVESTMENT HIGHLIGHTS

• Land acquisition
• TOD project on Old Klang Road land
• Healthy balance sheet
• Earnings forecast maintained
• Maintain BUY with a revised TP of RM2.03

Land acquisition. Mah Sing Group (Mah Sing) announced that Major Land Development Sdn Bhd, a wholly owned subsidiary of Mah Sing, had on 7th November 2024 entered into a sale and purchase agreement (SPA) with Pink Forest Sdn Bhd for the proposed acquisition of 5.24 acres of freehold lands along Old Klang Road for a total purchase consideration of RM112.97m. The proposed land acquisition is expected to complete in 1HCY25.

TOD project on Old Klang Road land. The proposed land acquisition is positive to Mah Sing as it will enhance M-Series projects of Mah Sing within Klang Valley. The land is strategically located 330 meters from the KTM Jalan Templer Station and 450 meters from the KTM Petaling Station. Hence, Mah Sing is planning to develop a Transit-Oriented Development (TOD) on the land, to be named M Aurora. The proposed development has an estimated GDV of RM660m. M Aurora is a new addition to Mah Sing's M Series projects which focus on affordable residential projects. M Aurora will offer serviced apartment units with sizes starting at 702sqft and indicative selling prices from RM468k.

Meanwhile, land cost to GDV ratio is attractive at 13%, in line with its recent land acquisition. Mah Sing targets to start registration of interest in 1QFY25 due to its quick turnaround strategy.

Healthy balance sheet. Mah Sing intends to fund the acquisition through a combination of internally generated funds and bank borrowings. Impact to balance sheet is limited as net gearing is expected to go up marginally to 0.13x from 0.1x. Balance sheet of Mah Sing remains healthy with net gearing remains low post-acquisition. That will allow Mah Sing to continue its land banking exercise.

Maintain BUY with a revised TP of RM2.03. We maintain our earnings forecast for FY24F/25F/26F. We revise our TP for Mah Sing to RM2.03 from RM2.01 after factoring in RNAV contribution from the latest land acquisition. Our TP is based on unchanged 13% discount to RNAV.

We remain positive on new sales outlook for Mah Sing which will be driven by healthy demand for affordable residential projects. Besides, its venture into data centre space through JV with Bridge Data Centres at Mah Sing DC Hub @ Southville City will provide recurring income in the long-term.

Hence, we maintain our BUY call on Mah Sing.

Source: MIDF Research - 8 Nov 2024