Mah Sing Group Berhad (Mah Sing) has made a significant acquisition of 6.19 acres of land in Taman Desa through its subsidiary, Mah Sing Properties Sdn Bhd, as reported by Kenanga Investment Bank in their Malaysia Company Update today (4 July 2024, Thursday). The transaction, valued at RM108 million in cash, is slated for completion in the first half of 2025 and is aimed at developing high-rise residential units with an estimated Gross Development Value (GDV) of RM1.0 billion.
Kenanga maintained its MARKET PERFORM rating on Mah Sing, emphasising the strategic value of the land acquisition in positioning Mah Sing favourably within a high growth potential area. This marks Mah Sing's third land purchase in FY24, reinforcing its commitment to expanding its footprint in prime locations. The development is expected to yield approximately 2,400 residential units across two phases, catering to robust demand in Kuala Lumpur's mature real estate market.
MIDF Investment Bank (MIDF), in their Malaysia Company Update released concurrently, expressed a BUY rating on Mah Sing, citing optimism about the acquisition. They highlighted the alignment of this move with Mah Sing's strategy of developing affordable M-series projects in the Klang Valley. The proposed mixed-use development, named M Aspira, will feature around 1,600 residential units and 800 units of Residensi Madani, with unit sizes ranging from 708 to 1,011 square feet, priced starting at RM448,000.
Additionally, MIDF noted Mah Sing's low net gearing, which is projected to increase slightly from 0.06x to 0.09x following the acquisition. This conservative leverage ratio is expected to support Mah Sing's aggressive land banking strategy without significant financial strain.
Both Kenanga and MIDF maintained their earnings forecasts for Mah Sing for FY24F, FY25F, and FY26F. Kenanga marginally revised the target price upwards to RM1.88 per share, while MIDF adjusted their TP to RM1.97, incorporating the expected contribution from the Taman Desa land acquisition. MIDF's TP is based on an unchanged 15% discount to the revalued net asset value (RNAV), reflecting confidence in Mah Sing's future growth prospects.
MIDF's positive outlook is further bolstered by Mah Sing's recent diversification into data centres, which is anticipated to provide long-term recurring income. They anticipate a share price return of +8.8% and an estimated dividend yield of +2.8%, culminating in a total expected return of +11.6%.
Both Houses recommend a BUY call on Mah Sing, highlighting its strategic land acquisitions, low net gearing, and strong market presence in affordable housing. Investors seeking exposure to Mah Sing's prudent growth strategy and promising development projects in Kuala Lumpur's dynamic property market are encouraged to consider Mah Sing as a compelling addition to their investment portfolios.