Mah Sing’s DC venture to provide viable revenue stream alternative


PETALING JAYA: Mah Sing Group Bhd’s venture into the data centre (DC) space is expected to provide the property developer with a viable revenue stream alternative.

Last week, Mah Sing announced that its wholly-owned subsidiary, Southville City Sdn Bhd, had entered into a collaboration agreement with Bridge Data Centres Malaysia V Sdn Bhd (BDC).

The tie-up will jointly develop data centre facilities and infrastructure on a 17.55-acre freehold land within the Southville City township in Bangi, Selangor.

Mah Sing said it has allocated 150 acres of landbank for further expansion at Southville City, which is earmarked to become a leading DC hub with planned capacity of up to 500 megawatts (MW).

The collaboration with BDC for a data centre will have an initial planned capacity of up to 100MW.

TA Research, in a report, said it viewed the development positively, as it marked a strategic shift for Mah Sing to diversify its revenue streams by leveraging its landbank to establish recurring income from DCs.

“With a monthly rent per kilowatt of US$110, the 100MW DC could generate approximately RM620mil in annual revenue.

“Assuming a net margin of 20%, Mah Sing’s 20% stake in the joint venture could yield a profit share of RM23.6mil. This amount corresponds to roughly 11% of its financial year 2023 core earnings.”

Subject to BDC securing hyperscale or artificial intelligence (AI) DC customers, TA Research said the target commencement of operations is within 12 to 18 months.

“We believe companies in the DC sector are set for stock valuation boosts due to rising demand fuelled by digital transformation. With growing reliance on data-intensive technologies like generative AI, cloud computing and Internet of Things, DC services are in high demand.

“Their scalable, recurring revenue model and high barriers to entry create competitive advantages and should continue attracting investor interest.”

RHB Investment Bank also concurred that the tie-up with BDC is set to spur Mah Sing’s revenue growth.

“Construction is expected to take about 18 months and the maiden income to the group should start from the second half of 2026. According to historical earnings by Chindata Group (which is a subsidiary of BDC), the 100MW capacity could potentially generate RM650mil in revenue per annum.”

CIMB Securities is also positive on the development.

“This is just the start of a slew of DC collaboration ahead as the management is still in talks with various interested parties to set up a similar arrangement.

“The management believes that Southville City is an ideal location for a DC hub, located within a 20km proximity to the existing DC hubs of both Cyberjaya and Bukit Jalil, creating a strategic triangle of DC hubs.”

CIMB Securities noted that the site is less than 50km from Telekom Malaysia’s upcoming new cable landing station in Morib, enabling it to provide a dark fibre network for the DC hub.

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Mah Sing , real estate , data centre

   

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