KEY INVESTMENT HIGHLIGHTS

• Acquiring freehold land in Taman Pelangi, Johor Bahru from S P Setia Bhd for RM156.8m with a potential GDV of RM1.5b
• This represents the third land acquisition in Johor for year, following two previous purchases in Mukim Pulai
• Marginal uptick in net gearing to 0.28x as the acquisition will be funded via a mix of internally generated funds and borrowings
• Maintain Buy with a slight upward revision in TP to RM2.08 to account for RNAV contribution from M Grand Minori

Land acquisition in Johor. Mah Sing Group (Mah Sing) announced that Dsara Sentral Sdn Bhd, a wholly owned subsidiary of Mah Sing had entered into Sale and Purchase Agreement with Pelangi Sdn Bhd, a subsidiary of S P Setia Berhad for the acquisition of two parcels of freehold land in Taman Pelangi, Johor Bahru totalling approximately 5.99 acres for total purchase consideration of RM156.8m. The land acquisition is expected to complete in 1H2025.

Third Johor land acquisition in 2024. We view the land acquisition positively due to the strategic location of the land. The land is located 3km from the Bukit Chagar RTS Station with accessibility via major highways. The land acquisition is the third Johor land acquisition of Mah Sing in 2024. Recall that Mah Sing acquired 100.4 acres of land in Mukim Pulai in April and acquired 59.12acres of land in Mukim Pulai in December. Hence, the latest land acquisition will further strengthen Mah Sing's presence in Johor.

The development on the land is named M Grand Minori (estimated GDV: RM1.5b) which is upgraded version of M Series will feature premium serviced apartments with indicative started selling price from RM328k while layout sizes are still under planning. The project is set to attract interest from local and international buyers due to its proximity to Bukit Chagar RTS Station.

Meanwhile, land cost to GDV ratio is attractive at 10.4%. The land cost of RM600psf is higher than previous land transaction of RM24psf for the previous land transaction in Mukim Pulai due to the strategic location of the latest land acquisition near RTS Station is in different district and development of the project i.e. high rise against landed home on Mukim Pulai land.

Marginally higher net gearing. Mah Sing intends to fund the land acquisition via a combination of internally generated funds and bank borrowings. We estimate net gearing of Mah Sing to increase to 0.28x from 0.22x in 3QFY24 after the latest land acquisition and acquisition of 59.12acres of land in Mukim Pulai for RM63m in December. Meanwhile, registration of interest of the project is targeted in 2QFY25, in line with its quick turnaround strategy.

Maintain BUY with a revised TP of RM2.08. We maintain our earnings forecast for FY24F/25F/26F. However, we revise our TP for Mah Sing to RM2.08 from RM2.04 as we include RNAV contribution from M Grand Minori. Our TP is based on unchanged 13% discount to RNAV. We remain upbeat on prospect for Mah Sing will be driven by growing exposure to the booming Johor property market. Besides, new property sales should remain solid due to healthy demand for affordable residential projects. Hence, we maintain our BUY call on Mah Sing.

Source: MIDF Research - 20 Dec 2024