With its new assets, the group would expand its M-Series affordable projects in the Klang Valley, with two new projects, namely, M Terra and M Hana.
PETALING JAYA: Analysts are positive about Mah Sing Group Bhd
’s recent land acquisition given the attractive purchase price and affordable housing development.
The property developer purchased two parcels of land in Puchong, Selangor, measuring 8.213 acres for RM85.9mil. This marks Mah Sing’s first land acquisition in 2023.
With its new assets, the group would expand its M-Series affordable projects in the Klang Valley, with two new projects, namely, M Terra and M Hana.
MIDF Research noted that the gross development value (GDV)of the projects would be RM726mil – an attractive acquisition price given the land cost-to-GDV ratio is 11.8%“The projects are affordably priced with an indicative selling price from RM250,000.
“The acquisition is in line with Mah Sing’s strategy of a quick turnaround as registration of interest is expected to take place as soon as the second half of 2023,” said the research house.
Mah Sing has announced that it would use internally generated funds, bank borrowings and/or net proceeds from the disposal of undeveloped land to finance the land acquisition.
“Recall that Mah Sing announced a land disposal in Penang for RM66.3mil in September 2022.
“We estimate a limited impact on the balance sheet from the land acquisition, as net gearing is expected to increase marginally to 0.28-times from 0.27-times as of September 2022,” said MIDF Research.
The research house maintained a “buy” call on Mah Sing with a target price of 74 sen, which includes the revalued net asset value (RNAV) contribution from the land acquisition. The target price is based on a 65% discount to RNAV.
Meanwhile, Hong Leong Investment Bank (HLIB) Research, which also maintained a “buy” call on Mah Sing at a target price of 84 sen, remained optimistic on the company’s affordable housing segment due to the growing middle class in the region.
“Given the affordable price range and strategic location in proximity to train stations, the project should be able to enjoy good demand. Post-acquisition, the group’s remaining GDV will increase to RM21.9bil from RM21.1bil as of Sept 30, 2022,” said the research house.
Moreover, HLIB Research noted that the group’s launches and sales target, which amounted to RM2.2bil for the financial year 2023 (FY23).
“We view the government’s recent plan to relax the conditions and speed-up the recruitment of foreign workers positively as this will allow Mah Sing to expedite the recognition of its sizeable unbilled sales of RM2.3bil, which should contribute positively to its FY23 earnings,” said the research house.
Kenanga Research also viewed Mah Sing’s intended developments positively due to the location of the housing projects which is likely to provide a quick turnaround and reduce land-carrying costs.
The research house has maintained an “outperform” call for Mah Sing with the target price of 60 sen, but cited that downside risks include persistent overhang in the high-rise segment, widening losses at its glove division, elevated inflation and interest rates that could hurt affordability.
