BIMB Research is optimistic about the acquisition following a strong market response to Mah Sing’s existing 500-acre M Legasi township.
PETALING JAYA: Analysts are positive on Mah Sing Group Bhd
’s and S P Setia Bhd’s prospects, given the recent proposed acquisition of 305-acre freehold land in Semenyih, Selangor by Mah Sing from S P Setia’s subsidiary.
The proposed acquisition was Mah Sing’s third this year, adding a combined total potential gross development value (GDV) of at least RM3.3bil to its land bank.
Following the acquisition, Mah Sing’s land bank would increase to 2,554 acres, with a remaining GDV of RM29.5bil, TA Research said in a note to clients yesterday.
Based on the planned RM1.7bil in GDV, Mah Sing’s purchase price of RM273.5mil translated to a land cost-to-GDV ratio of 16.1%, which was within a favourable range for township developments of this scale, the research house noted.
Overall, the acquisition cost is reasonable considering strategic location within the southern Klang Valley, robust demand for affordable-to-mid-tier landed homes and Mah Sing’s track record in township developments, according to TA Research.
It said the acquisition aligned with Mah Sing’s strategy of securing prime land in Greater KL to expand its M Series portfolio.
Hence, it maintained a “buy” call on Mah Sing with an unchanged target price of RM1.72 per share.
In a report, MBSB Research said the land acquisition would strengthen Mah Sing’s presence in Semenyih, especially with Mah Sing’s M Legasi township that was launched in June that saw encouraging sales with Phase 1A and 1B fully sold starting from RM635,000.
It kept a “buy” on the stock with an unchanged target price of RM1.51.
BIMB Research is also optimistic about the acquisition following a strong market response to Mah Sing’s existing 500-acre M Legasi township.
“Post-acquisition, remaining GDV and unbilled sales will increase to RM32.37bil and the landbank will expand to 2,554 acres.”
The research house has maintained a “buy” call with an unchanged target price of RM1.87.
“We continue to like Mah Sing given its strong fundamentals and ongoing land acquisitions which facilitate a quick turnaround and enhance visibility for sustainable long-term earnings; and the diversification of revenue streams through the leveraging of its land bank to generate recurring income,” it added.
On S P Setia, Maybank Investment Bank Research (Maybank IB) said the latest land sale came within expectations, as “the management had indicated its intention to rebalance and monetise its land bank”.
It noted that it is positive on the land deal given its attractive price of RM22.80 per sq ft, which is 14% to 26% higher than past transactions (RM18 to RM20 per sq ft) by Eco World Development Bhd and Mah Sing back in 2023 to 2024.
As there is no immediate plan to develop the Glengowrie Estate land, Maybank IB said “redeploying capital to ongoing projects is more efficient, in our view.”
Since S P Setia would retain a sizeable 1,231-acre landbank in Semenyih-Bangi area post the land sale, the research house said it would be able to time future launches for better value creation as EcoWorld and Mah Sing’s upcoming developments should drive growth there.
The research house revised S P Setia to a “buy” from a hold, but lowered its target price to RM1 per share.
Meanwhile, TA Research said S P Setia has 42 active projects across the country and abroad and will retain an ample total landbank of 4,886 acres post-sale (with about 2,523 acres remaining in the central region).
“We view the move positively as it demonstrates disciplined execution of the group’s land monetisation and capital-recycling strategy. Including this transaction, S P Setia has monetised RM2.3bil worth of land from financial year 2023 (FY23) to FY25.
“Proceeds will be utilised for debt repayment, working capital, and reinvestment in strategic growth assets.”
TA Research has kept a “buy” call on S P Setia with an unchanged target price of RM1.26 per share.
