KUALA LUMPUR: The value of Mah Sing Group Bhd
’s land bank in the Klang Valley has yet to be unlocked, which could add to its revenue eventually.
Strategically located land parcels have sound prospects as the property’s outlook is predicated on being at a good location.
RHB Research said the company’s prospects are also seen to be positive from its planned industrial developments and the strong war chest it has for further landbanking.
It said some parcels of Mah Sing’s Southville development in Bangi had secured the provision of high power supply during the upfront infrastructure stage many years ago.
The research house expects some positive news flow on this matter to come in the second half of the year.
“Such a feature significantly enhances the value of these commercial parcels of land today. Its management has seen strong interest from local and foreign players recently, since the location and power supply are top priorities for many industrial players,” it said.
RHB Research also highlighted its Sepang development with a size of 562 acres.
“The Mah Sing Business Park in Sepang may comprise smaller industrial parks within the entire development – as Mah Sing’s collaboration with a China party may lead to some interested parties taking up a portion of land to set up their own industrial cluster,” it said.
Meanwhile, RHB Research said Mah Sing’s new land parcels may provide further upside to its net asset value estimates.
“With RM500mil free cash flow in hand for the financial year 2024 due to the completion of various projects, management has been on the lookout for new land in the Klang Valley and Johor, for both township and industrial developments,” it said.
Additionally, the company’s net gearing of only 0.08 times gives it ample headroom to gear up if any strategic opportunities arise.
The research house also maintained its “buy” call and increased its target price to RM1.55 from RM1.15, which is a 30% upside opportunity and circa 4% of FY24 forecast yields.
On the rubber gloves business, which Mah Sing is also involved in, RHB Research noted its cost efficiency, which could aid its turnaround in this area.
But it also cautions that the average selling prices (ASPs) of its gloves is yet to recover.
“Management had indicated that as soon as ASP recovers to over US$16.50 per thousand pieces, this segment should undergo a more sustainable earnings recovery.
“Note that in the fourth quarter of 2023, its manufacturing segment’s earnings before interest and taxes was positive at RM0.41mil,” it said.
