AMINVESTMENT Bank Bhd has reaffirmed its ‘Buy’ rating on Mah Sing Group Bhd, raising the company’s fair value to RM2.11 per share from RM2.09.
This adjustment, it said, reflects the potential of Mah Sing’s new quick turnaround mixed-development project, M Aspira, which boasts a substantial gross development value (GDV) of RM1.01 billion.
The updated fair value is based on a 30% discount to the sum-of-parts valuation, with no changes to the neutral three-star environmental, social and governance rating.
According to the research house, this fair value implies a financial year ending Dec 31, 2025 (FY25) price-to-earnings (PE) ratio of 19 times, near its four-year peak.
AmInvestment Bank has also increased Mah Sing’s earnings forecasts for FY25F-FY26F by 4%-6% to account for the rapid contribution from M Aspira.
The project is expected to open for registration within the next two months, despite the acquisition of the 6.2-acre (2.51ha) leasehold land in Taman Desa from Datuk Bandar Kuala Lumpur being set for completion in the first half of 2025.
“The acquisition land cost of RM108 million at RM400 per sq ft is fair given that bungalow land in the township is being offered at RM360-RM450 per sq ft currently.
“This also translates to a reasonable land cost reaching only 11% of GDV, at the low end of the industry’s 10%-25%,” the research firm stated.
M Aspira will be developed over four to five years and will feature 1,600 residential units and 800 units of Residensi Madani with a 40% Bumiputera quota.
The units, sized between 708 and 1,011 sq ft, will be priced starting from RM448,800, making them competitive in the mid-range affordable segment.
For comparison, the recently launched Atas condominium in Taman Desa was priced at RM700 per sq ft and achieved a 70% booking rate during its soft launch in May.
The project is located on the largely vacant Taman Desa Water Theme Parkland, benefitting from high accessibility via multiple expressways and proximity to the city centre, Mid Valley Megamall, KL Sentral, Bangsar and major suburbs.
Mah Sing plans to extend the land tenure from 72 to 99 years before the project’s launch, with the extension cost included in the development budget.
AmInvestment Bank anticipates strong interest in M Aspira due to its affordability and strategic location.
The firm highlighted that this development underscores Mah Sing’s reputation for quick turnarounds, following acquisitions of 562-acre agricultural land in Sepang, Selangor, for industrial use and 100-acre freehold land in Johor for the M Tiara 2 township development.
AmInvestment Bank noted that Mah Sing’s stock trades at a favourable FY25F PE of 16 times versus a four-year peak of 19 times, with a fair dividend yield of 3%.
The group’s net gearing is expected to remain below 0.2 times by the end of FY24, supported by gross cash of RM966 million and potential free cashflow from unsold inventories.
AmInvestment Bank believes that the mid-to-long-term outlook for Mah Sing remains positive, driven by its rapid execution, focus on affordable properties in high-demand locations and strategic ventures such as the data centre industry collaboration with Bridge Data Centres Malaysia in Southville City, Dengkil, Selangor. — TMR
This article first appeared in The Malaysian Reserve weekly print edition
Source: The Malaysia Reserve
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