Analysts remain optimistic about Mah Sing after Taman Desa land acquisition

KUALA LUMPUR (July 4): Analysts remain bullish on Mah Sing Group Bhd (KL:MAHSING) after it acquired a plot of land in Taman Desa that will be used for a 1 billion ringgit residential tower project.

Kenanga Research in a note on Thursday said Mah Sing paid a fair price for the plot, considering recent transactions of RM400-450 per square foot (sf) in the area. The firm has a “market perform” call on the stock, with a target price of RM1.88.

“Regarding the indicative asking price of RM448,000 for a 708 sq ft apartment (RM633 psf) for a residential apartment, we believe it is a reasonable price compared to the reported asking prices of around RM480,000-RM550,000 for residential apartments in the area as seen on online property portals.

“Overall, we are slightly positive as the planned development is reasonably priced within a highly desirable address in a mature area, enabling rapid monetization,” the statement reads.

Meanwhile, MIDF Research is positive about Mah Sing’s recent diversification into data centres, which will provide the company with recurring income in the long term.

The equity house maintained its “buy” rating on Mah Sing shares, raising the target price (TP) to RM1.97 (from RM1.94 previously).

“Our tariff rate is based on an unchanged 15% discount on net realizable value added (RNAV),” MIDF said.

MIDF added that the Taman Desa land acquisition transaction is expected to be completed in the first half of calendar year 2025 (1HCY2025) and is in line with the company’s development strategy of building affordable M-series projects.

Mah Sing intends to finance the acquisition with its own funds and bank loans, the company said in a note.

Hence, with a low net debt ratio of 0.06 times in the first quarter of fiscal year 2024 (1QFY2024) and expected to be as high as 0.09 times, the research house believes that the low net debt ratio will allow the company to continue its aggressive land acquisition activity.

At the time of writing, Mah Sing shares gained two sen or 1.1% to RM1.83 on Thursday, valuing the group at RM4.69 billion.