Investment Highlights

• We maintain our BUY call on Mah Sing with a slightly higher fair value of RM1.28/share (vs. RM1.27/share previously) based on SOP valuation (Exhibit 2). We make no changes to our FY20–22 numbers. Mah Sing’s latest land acquisition will bring additional an RM15.65mil to our SOP valuation after 50% discount to RNAV.

• Mah Sing kicked off its first land deal in 2021 with the acquisition of a 100-acre parcel of leasehold land in Bandar Baru Salak Tinggi, Selangor, from the Sepang District/Land Office for RM 95.83mil. The payment will be settled within 3 months (i.e. 19 May 2021). The land comes with an approved development order.

• The acquisition price of RM95.83mil (RM22 psf) implies a costto-GDV ratio of 14.6%, and is within the range of 10%–20% for mixed development in Klang Valley. While there are not many identical transactions within the area recently, the asking price for residential land surrounding the neighbourhood with land area larger than 30 acres (130,680 sq ft) ranges from RM22 psf to RM43 psf.

• Mah Sing plans to develop double-storey terrace houses, under the project M Senyum with an indicative gross development value (GDV) of RM656mil. M Senyum is targeted at the medium-income segment, particularly, first-time home buyers with prices starting from RM400K (RM342 psf). The project is scheduled for launching by 2H2021 and targeted for completion by 2026.

• Despite the land being located at a suburban areain the , southern part of Klang Valley, it is well connected to Kuala Lumpur City Center (KLCC), Putrajaya and Cyberjaya via major highways (i.e. Elite highway). It also in line with the group’s focus on affordable landed residential properties.

• We are positive on the acquisition as it will help sustain Mah Sing’s property earnings over the medium term. Moreover, we believe the project will be well received given its convenience of highway connectivity and amenities nearby, like universities, medical centres and industrial parks. Nonetheless, we make no changes to our FY20–22 numbers.

• We believe the outlook for Mah Sing remains positive premised on: (i) its healthy balance sheet with net cash position as of 9MFY20; (ii) strong sales achieved in the past few quarters; and (iii) positive contribution from its glove manufacturing business in FY21’s earnings onwards. At its current share price, it offers a potential upside of more than 60%. Maintain BUY.

Source: AmInvest Research - 22 Feb 2021