Among the developers under RHB Research (RHB)’s coverage, Mah Sing has been the most active one in landbanking this year. Including yesterday’s land deal, the company has spent RM639 million on acquiring new land.
“We believe that it should be able to cope with the financing of all acquisitions, given the expected free cash flow generated upon its handover of upcoming projects,” said RHB in the recent Small Cap Asean Research Report, reiterating Buy for the stock.
Mah Sing announced that it has entered into a joint venture agreement with Liberty Triangle for the proposed joint venture, to undertake the development of two pieces of land in Kepong.
The land has a total area of 4.88 acres and payment for the total consideration of RM85.3 million will be made on a deferred and staggered basis. The purchase will be funded by Mah Sing’s internal funds and bank borrowings.
The consideration translates into a land cost of RM401 per sq ft, which is on par with the price Mah Sing paid for the M Luna land in 2019. The land comes with an approved development order (DO), with one of the DO approved with a plot ratio of 1:6.
The land title has also been converted with the category of land use “Bangunan,” while the land premium has been paid and earthworks are partly completed.
This new land will be Mah Sing’s fourth project in the Kepong area after Lakeville Residence (completed), M Luna (fully-sold) and M Nova (to be launched in the second half 2023). These three projects are all within a 5km radius from the new land.
Mah Sing will develop the land into a mixed residential project under its M-series brand, and name it M Zenya. This will comprise retail lots and serviced apartments with an indicative builtup area of 718-1,067 sq ft each.
“Indicative prices are RM420,000 and upwards, similar to the pricing for its M Luna and M Nova projects. As the land has a direct frontage along the Kepong Metropolitan Lake and is next to the Keponggi Square commercial development, we believe M Zenya will be well-received upon its launch (registration of interest will start in second half 2023)” said RHB.
RHB made no changes to their financial year 2023-2025 future earnings, as initial billings from the high-rise project should be rather minimal. Mah Sing’s unbilled sales amounted to RM2.26 billion as at quarter one 2023.
Their SOP-based target price is based on an unchanged 65% discount to revalued net asset value for the property arm, 7x financial year 2023 future price-earnings ratio for the plastics business, and 5x financial year 2023 future price-earnings ratio for glove manufacturing unit, with a 0% environmental, social and governance discount/premium applied.
