Mah Sing Group recently announced that its wholly-owned subsidiaries, Nova Legend Development Sdn Bhd and Jastamx Sdn Bhd had entered into shareholders’ agreement with The South Sea Capital Sdn Bhd to jointly carry out the business relating to industrial real estate property development, land acquisition, ownership, operation, management, and leasing through a JV. The JV allows the developer to ride on the growing demand for industrial property in Malaysia from buyers in China. Local analysts give their views on the latest collab.
To note that the directors of TSSC are Sun Jianwei and Hooi Jia Hao while Sun Jianwei is also the Executive President of the Malaysia JiangSu Entrepreneurs Business Association, Mah Sing stewarded by Tan Sri Leong Hoy Kum believes that its JV partner will be able to bring value as Sun Jianwei has an extensive network while JiangSu is the second richest province in China. The city has a diverse industrial landscape with key sectors ranging from manufacturing to technology and services.
The house gathers that the developer will only start looking for industrial land for development after securing buyers from China which translates to a lower-risk proposition. On the business model, it is considering various options including outright land sale, built-to-suit, or lease on the property depending on the profile of buyers. MIDF has come to understand that Mah Sing is under negotiation with various potential buyers from China and land banking for the industrial development is likely to happen by the end of this year or next year.
Hence, the house does not foresee earnings impact from the JV in the near term. Meanwhile, the profit margin from industrial properties is typically higher at 20% to 30%, hence giving better earnings visibility in the future
Overall, MIDF remains positive on Mah Sing due to stable new sales prospects as new sales in 1HFY23 are tracked to hit management’s new sales target of RM2.2b for FY23.
