KEY INVESTMENT HIGHLIGHTS

• Land acquisition in Johor for M Tiara 3 project
• Growing contribution from Johor projects
• Marginally higher net gearing
• Earnings forecast maintained
• Maintain BUY with a revised TP of RM2.04

Land acquisition in Johor for M Tiara 3 project. Mah Sing Group (Mah Sing) announced that Loyal Sierra Development Sdn Bhd, a wholly owned subsidiary of Mah Sing had entered into Sale and Purchase Agreements with vendors for the proposed acquisition of 59.12 acres of freehold lands in Mukim Pulai, Johor Bahru for total purchase consideration of RM62.98m. The land will be developed into M Tiara 3 township. The land acquisition is expected to be completed in 1HCY25.

Growing contribution from Johor projects. We view the land acquisition positively as it will strengthen Mah Sing's presence in Johor.

Currently Mah Sing has a few ongoing projects in Johor namely Meridin East, M Minori and M Tiara. The land acquisition allows Mah Sing to ride on the strong demand for landed house in Johor. Note that contribution from Johor projects to total new sales increased to 41% in 9MFY24 from 26% in FY23. The land acquisition is the second land acquisition of Mah Sing in Johor in 2024. Note that Mah Sing acquired 100.4 acres of land in Mukim Pulai, Johor in April 2024 for purchase consideration of RM103.7m which is for M Tiara 2 project. The purchase consideration of land for M Tiara 3 of RM24.50psf is in line with price tag of RM23.70psf for M Tiara 2 land.

Marginally higher net gearing. Proposed developments on M Tiara 3 are super-lined homes with indicative selling price starts from RM780k, offering larger landed residential units. Estimated GDV for M Tiara 3 is RM463m which translates into attractive land cost to GDV ratio of 13.6%.

Meanwhile, M Tiara 3 will commence as a continuation of M Tiara 2. Mah Sing intends to fund the land acquisition via a combination of internally generated funds and bank borrowings. Net gearing is expected to increase to 0.24x from 0.22x in 3QFY24.

Maintain BUY with a revised TP of RM2.04. We make no changes to our earnings forecast for FY24F/25F/26F. We revise our TP for Mah Sing to RM2.04 from RM2.03 as we include RNAV contribution from M Tiara 3. Our TP is based on 13% discount to RNAV. We remain positive on Mah Sing as the landbank expansion in Johor will further drive new sales growth. Hence, we maintain our BUY call on Mah Sing.

Source: MIDF Research - 4 Dec 2024