MIDF Research viewed the land acquisition positively as “it allows Mah Sing to to continue expanding its M-series of affordable projects.”
PETALING JAYA: Analysts are positive about Mah Sing Group Bhd
’s latest RM76.1mil land-buy in Johor that is slated for a residential property development, called M Tiara, with a gross development value (GDV) of about RM480mil.
According to Hong Leong Investment Bank (HLIB) Research, the acquisition price for the freehold 75.7 acres in Pulai was “fair”.
“The acquisition translates to a land cost-to-GDV ratio of 15.9%, which we deem to be fair given the higher selling price of the project.
“This should provide a decent margin to the project, which is in a strategic location in mature township and the freehold status of the land,” HLIB Research said in a note to clients yesterday.
The research house expects the project to be well-received.
“We believe the price point of the project at over RM620,000 is reasonable and should enjoy a brisk take-up rate,” it added.
Post-acquisition, HLIB Research noted the group’s net gearing will increase to 21.6% from 20.1% as at March 31, while its remaining GDV will increase to RM21.3bil from RM20.82bil as at March 31.
The research house has maintained a “buy” on the stock with an unchanged target price (TP) of 86 sen a share.
“We continue to like Mah Sing for its agile business model, which allows it to adapt and pivot its launching strategy in response to the changing sector dynamics,” it said.
The stock provides a decent projected financail year 2023 (FY23) dividend yield of 5%.
Kenanga Research also said the purchase price was fair from a land-to-GDV perspective as well as price per sq ft.
“Overall, we are mildly positive as the intended development is affordably priced with a highly sought-after address in a mature area, allowing for quick monetisation,” it noted.
The research house expects Mah Sing’s net gearing to remain healthy at 0.22 times from 0.20 times.
It has also kept the stock’s TP at 70 sen a share based on an unchanged 65% discount to return on net asset value, which is at the upper-end of the sector’s average of 60%-65%.
“This is to reflect its high exposure to high-rises. which are currently facing a national overhang issue,” it noted.
Kenanga Research also liked Mah Sing for its commendable cash management with net gearing reduced from a peak of 0.37 times to 0.20 times as of 1Q23.
In addition, the group offers appealing lifestyle-focused products at affordable prices providing ease of entry for first-time home buyers, and quick turn-around strategy for its land banks, which helps to minimise land carrying costs.
The research house, which maintained an “outperform” call on the stock, said the risks to its call included the persistent overhang in the high-rise segment, widening losses at its glove division due to oversupply and sustained elevated inflation and rising interest rates.
Meanwhile, MIDF Research viewed the land acquisition positively as “it allows Mah Sing to to continue expanding its M-series of affordable projects.”
Furthermore, the land cost to GDV is deemed attractive at 16% of GDV.
The research house said the land acquisition was in line with Mah Sing’s strategy of undertaking a quick turnaround as registration of interest is expected to be in the first half of 2024 (1H24).
MIDF Research did not foresee earnings impact in the near-term, as the project is expected to be launched in 1H24.
“Hence, we make no changes to our earnings forecast,” said the research house, which maintained a “buy” on the stock with an unchanged TP of 75 sen a share.
“We remain positive on Mah Sing as we think that new sales outlook for the company will be driven by launches of properties within affordable price range.
“Besides, dividend yield is also attractive at 5.7%,” noted MIDF Research.
