Kenanga Research said the group is considering possible long-term exit strategies should the pipeline for joint-venture agreements stay sustainably secured.
PETALING JAYA: Analysts are optimistic about Mah Sing Group Bhd
’s collaboration with Bridge Data Centres Malaysia VII Sdn Bhd (BDC) for the expansion of data centre (DC) development in Southville City.
Overall, Kenanga Research is positive with the development as it will help the group grow its recurring income streams.
“Additionally, indication that the second collaboration was likely expedited by strong demand by off-takers from the first DC suggests that its capacity will be well- occupied,” the research house noted.
Following a briefing, the brokerage said the group is considering possible long-term exit strategies should the pipeline for joint-venture agreements (JVAs) stay sustainably secured.
“This would likely improve the valuations for its DC assets (on top of its cheap land cost) to make monetisation more viable,” Kenanga Research noted.
The group has signed its second collaboration agreement with BDC to expand the DC development in Southville City.
The new site spans approximately 36 acres and is projected to provide 200 megawatt (MW) of power, with a valuation of RM311mil.
Recall that the group’s first agreement with BDC, signed on May 31, 2024, involved an 18-acre plot for 96MW, valued at RM122mil. The entire hub can support a minimum of 500MW, positioning Southville City as a modern DC hub.
The first phase of the DC development is expected to be operational by 2026.
As part of this collaboration, BDC will also provide a forfeitable deposit to reserve the land while both companies work towards finalising the second JVA.
The six-month process will involve establishing a JV company, defining share ratios, and completing the sale and purchase agreement for the land.
It has been indicated that the JVA may not share similar terms with the first agreement.
Kenanga Research estimated that Mah Sing’s DC business will contribute about RM37.6mil to earnings for its 20% stake by financial year 2027 (FY27).
Meanwhile, Hong Leong Investment Bank (HLIB) Research noted that the construction of the DC is expected to begin in the second quarter of 2025, with completion anticipated within 12 to 18 months.
Income contribution is projected to start in the second half of 2026, reaching full-year contribution by FY27.
“Using Chindata Group’s (parent company of BDC) historical financials as a guideline, we assume RM6.25mil in revenue per MW.
“With a 70% occupancy rate and a 15% net profit margin, the JV’s annual net profit would be RM196.9mil, of which Mah Sing’s 20% stake translates to RM39.4m,” HLIB Research noted.
