KUALA LUMPUR (June 25): Investment analysts have raised their target prices (TPs) for property developer Mah Sing Group Bhd (KL:MAHSING) premised on its diversification into the data centre (DC) segment and continuing land bank replenishment efforts.

In separate notes on Tuesday, RHB Investment Bank and MIDF Research maintained their respective 'buy' calls on the stock. RHB IB raised its TP to RM2.26 from RM2, while MIDF revised up its TP to RM1.94 from RM1.83.

With Mah Sing successfully securing a 500MW power allocation last week, RHB IB believes the supply certainty will significantly enhance the value of its 150-acre (60.70-hectare) land, earmarked for Mah Sing Data Centre Hub @ Southville City.

“This should also attract other DC players,” the research house said.

“With greater visibility of the DC hub development, we now revalue Mah Sing’s about 132 acres of remaining land in the Southville DC Hub (150 acres minus 17.55 acres for Bridge DC Malaysia V).

“Recall that the 17.55 acres of commercial land earmarked for Bridge DC was transacted at RM160 psf, while the commercial land in the surrounding area is valued at RM200 psf.

“Assuming a gross margin of 50% (for the balance 132-acre DC Hub land), the net surplus from our revaluation for the entire Southville will be boosted by 63%,” RHB IB said.

Meanwhile, MIDF said Mah Sing is confident of hitting a sales target of RM2.5 billion for the financial year ending Dec 31, 2024 (FY2024), as demand for its M-Series affordable homes remains resilient.

The research house said Mah Sing’s launches in the pipeline are robust in the second half ending Dec 31, 2024 (2HFY2024), including M Zenya in Kepong, M Azura in Setapak, M Tiara in Johor Bahru, M Sinar in Southville Bangi, M Terra in Puchong, M Legasi in Semenyih, and MSS Business Park in Sepang.

“Price points for M Series projects are attractive, with 72% of projects priced below RM500,000 [for each unit],” MIDF said.

It said Mah Sing is expanding its manufacturing division, including plastic manufacturing and glove manufacturing.

MIDF said that operating profit of Mah Sing's manufacturing division was minimal at less than 1% of total operating profit in the first quarter ended March 31, 2024 (1QFY2024).

“However, the segment has turned around from an operating loss in 1QFY2023, due to improved efficiency for glove manufacturing,” MIDF said.

The house remains positive on the long-term outlook for Mah Sing, due to its high exposure to the affordable residential segment, which is supported by strong buying interest.

“Besides, the diversification into data centres will provide recurring income in the long term.

“Meanwhile, the balance sheet of Mah Sing is strong, with low net gearing of 0.06 times,” MIDF said.

At the time of writing on Tuesday, Mah Sing had gained 3.59% or six sen to RM1.73, with 12.75 million shares traded, giving the stock a market value of RM4.43 billion.