TA Research said Mah Sing’s robust balance sheet positioned the company well for more land acquisitions in the future.
PETALING JAYA: Analysts are bullish about the prospects of Mah Sing Group Bhd following its land acquisition in Sentul, Kuala Lumpur.
The 2.78-acre freehold land was acquired for RM32mil, or equivalent to RM264.3 per sq ft, with TA Research commenting that it is strategically situated just 5km from the city centre.
The site is planned for a new development – M Aria – with an estimated total gross development value (GDV) of RM283mil.
“Planned as a high-rise project with a development period of four years, M Aria will feature apartment units in various configurations, including three-bedroom and four-bedroom layouts.
“The indicative built-up areas are expected to range from 800 sq ft to 950 sq ft, with starting price for the most affordable units anticipated at RM498,000,” said the research house.
Additionally, it pointed out that public transportation options include the Sentul Timur light rail transit station located 3km from the site and three KTM stations – Sentul, Kampung Batu and Batu Kentonmen – within a 2.5 to 3.5km radius.TA Research is positive about the deal, stating that the land cost makes up 11% of its total development value.
“Given that the land cost-to-GDV ratio falls below the standard 20% rule, we consider the acquisition price to be reasonable.
“The acquisition aligned with Mah Sing’s strategy of securing prime land in Greater Kuala Lumpur and Johor to expand its M-Series, the group’s signature range of affordable developments.
“Demand for affordable homes in urban areas remains robust, as evidenced by the strong take-up rate exceeding 90% for Mah Sing’s M-Series launches.”
The research house noted that following this acquisition, Mah Sing’s land bank will increase to 2,415 acres, with a remaining GDV of RM28.8bil.
In terms of funding, it said Mah Sing’s robust balance sheet with a net gearing of 0.2 times and a cash balance of RM747mil as of September 2024, positioned the company well for more land acquisitions in the future.
Similarly, CIMB Securities is favourable about Mah Sing for its exposure to the affordable property market while the group’s expanding footprint in Johor also underpinned its emergence as a key beneficiary of the Johor-Singapore Special Economic Zone.
“We estimate that Mah Sing’s Johor land bank accounts for 1,172 acres, or close to half of the group’s total land bank”.
Meanwhile, BIMB Securities Research said, in a note to clients, it is positive about Mah Sing given the developer’s strong fundamentals and active ongoing land acquisitions, which would provide sustainable long-term earnings visibility and a quick turnaround strategy.
In addition, it said Mah Sing’s diversification of revenue streams through the leveraging of the latter’s land bank to generate recurring income from data centres also positioned the group in good stead.
TA Research, CIMB Securities and BIMB Securities Research had maintained “buy” calls on Mah Sing, with respective target price of RM2.41, RM2.10 and and RM2.19.
According to CIMB Securities, the counter is trading at a 29% discount to its sum-of-the-parts valuation.