MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a BUY rating for Mah Sing Group Bhd with a revised target price of RM2.04, up slightly from RM2.03, following the group's announcement of a land acquisition in Johor for its M Tiara 3 project.
The research house highlighted the strategic importance of the purchase in strengthening Mah Sing's presence in Johor and its potential to boost future earnings.
The acquisition involves 24ha of freehold land in Mukim Pulai, Johor Bahru, purchased for RM62.98 million through its wholly owned subsidiary, Loyal Sierra Development Sdn Bhd. The land, earmarked for the M Tiara 3 township, is expected to support the group's continued focus on landed residential properties, with the development set to feature super-linked homes starting at RM780,000. Estimated gross development value for the project is RM463 million, with development slated to commence as a continuation of the M Tiara 2 project.
The move marks Mah Sing's second land acquisition in Johor this year, following the April purchase of 41ha of land in the same area for the M Tiara 2 project.
MIDF Research noted that the pricing for the M Tiara 3 land acquisition, at RM24.50 per sq ft, aligned with the earlier purchase's RM23.70 per sq ft cost.
MIDF Research viewed the acquisition positively as it positions Mah Sing to capitalise on the strong demand for landed homes in Johor. Contributions from the group's Johor projects to total new sales have already risen to 41% for the first nine months of its financial year 2024 (FY24) compared to 26% in FY23.
Funding for the new project will come from a combination of internally generated funds and bank borrowings which will result in a marginal increase in Mah Sing's net gearing ratio to 0.24 times from 0.22 times as of the third quarter of FY24. Despite this slight rise, analysts are confident in the group's ability to manage its financials effectively.
Moving forward, MIDF Research remains optimistic about Mah Sing's prospects, with the continued expansion of its landbank in Johor as a catalyst for sales growth.