M series to drive sales for Mah Sing

PETALING JAYA: Mah Sing Group Bhd’s active land-banking is expected to support sales, especially for the company’s affordable M housing series which will in turn, drive earnings, say analysts.

They maintained their positive view of the company’s stock following its announcement last week of the acquisition of 1.13ha leasehold land in Setapak, Kuala Lumpur for RM44.5mil, the fifth acquisition this year.

The land would be developed into a residential project known as M Mira with gross development value (GDV) of RM300mil and an indicative selling price of RM499,000 onwards per unit targeting mostly first-time buyers.

Noting that this would be the fifth project by the developer in the Setapak/Wangsa Maju location, MBSB Research said the expansion of the M series “is expected to continue driving new sales growth of Mah Sing, which will in turn support earnings prospects”.

It has maintained a “buy” call on the stock with a target price (TP) of RM1.52.

The company had also, in a separate announcement, said it was terminating the acquisition of 227.27ha in Sepang, Selangor that was to be developed into a business park due to the soil conditions at the location.

TA Research said Mah Sing’s management shared that the termination of the Sepang acquisition allows the company to deploy capital more efficiently for projects offering faster execution and stronger returns.

This is in line with its disciplined investment approach and focus on urban residential and mixed-use developments with shorter cash cycles.

It has maintained a “buy” recommendation on the stock with a TP of RM1.72, pointing to the company’s active land bank underpinned by robust balance sheet, steady sales momentum, and strong brand equity in the M Series affordable housing segment.

Although taken aback by the termination of the Sepang deal because of the positioning as key to the company’s industrial property strategy, it said management has reassured that active discussions were underway for more suitable land opportunities.

On the Setapak land acquisition, the research house said the deal aligned with the company’s established M series project of delivering affordably priced homes in strategic, well connected urban corridors.

“The RM366 per sq ft purchase price translates into a 14.8% land cost-to-GDV ratio, comfortably below the conventional 20% benchmark, implying healthy profit margins,” the research house said.

It added that the land comes with a development order enabling faster project turnaround.