M Astra Garners Strong Registration Interest, “Buy” Call on Mah Sing: MIDF

(photo credit: iProperty)

MIDF Research has made a visit to Mah Sing Group’s M Astra sales gallery and came away feeling reaffirmed on positive new sales prospect for Mah Sing Group.

Key takeaways from the sales gallery visit are:

Latest addition to M Series. M Astra in Setapak is the latest addition to Mah Sing’s M Series affordable range development. M Astra is sitting on 5 acres of land in Setapak which was acquired in May 2021. M Astra is 2 blocks of serviced apartments with total of 1,426 units. Built-up is ranging from 850sf to 1,044sf. It also comprises of 24 units of retail shop lots with 2 corner lots come with drive thru feature. The project has total GDV of RM631m with affordable selling price starts from RM399k. Note that 98% of the units are priced below RM500k with price per square feet ranging between ~RM470 to ~RM520.

Strong registration interest. M Astra is expected to be officially launched by end of November upon getting Advertising Permit and Developer’s License (APDL). Nevertheless, tower B of M Astra has opened for registration and the research house gathers that registration of interest was overwhelming with 10k registered interest. Thus, it is expected decent property sales from M Astra upon its official launch in November as Mah Sing is expected to convert booking into sales fast due to the overwhelming response from buyers. Sales from M Astra is expected to underpin new property sales of Mah Sing in FY22 and FY23. Note that Mah Sing achieved new sales of RM1b in 1HFY22 and is well on track to hit new sales target of RM2b for FY22.

Margin less affected by rising raw material cost. Mah Sing expects margin to be less affected by the hike of raw material price in mid of 2022 as it has measures in place to manage the hike in cost such as managing contract award timeline. Besides, Mah Sing managed to increase prices of its projects such as M Senyum in Salak Tinggi and Sensory in Southville City which would help to mitigate the impact of rising raw material prices.

Meanwhile, balance sheet of Mah Sing remains healthy with net gearing of 0.34x in June 2022, allowing Mah Sing to have strong financial muscle for land banking exercise. Mah Sing is still on the lookout for land in Klang Valley with potential new target areas in Perak, Seremban and Melaka. Besides, Mah Sing is also eyeing to expand industrial property development which typically command higher margin.

Hence, MIDF Research has maintained “BUY” with an unchanged TP of RM0.74. Post visit, the research house made no changes to its earnings forecast for FY22/23F.

The target price (TP) for Mah Sing is maintained at RM0.74, based on 65% discount to RNAV. The research house is affirmed on the positive new sales prospect of Mah Sing which is driven by its strategy of selling properties in the affordable price range. Demand for Mah Sing’s affordable price range properties remained supported by genuine home buying interest as ~65% of its buyers are 35 years old and below.

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