Analysts positive on Mah Sing's moves

PETALING JAYA: Analysts are positive on Mah Sing Group Bhd's move to scrap two deals primarily a land development project in Shah Alam and instead entering into new deals for land in Cheras and Bukit Mertajam for more than RM300 million.

MahSing announced on Monday it was aborting its three-year initiative to develop the 85.43 acres of land housing the Sultan Salahuddin Abdul Aziz Shah golf course in Shah Alam, and in its stead acquire a vacant freehold land in Bukit Mertajam for RM43.8 million to be developed into an industrial business park and a piece of land in Cheras for RM263.48 million into an integrated development dubbed "M Vertica" with a gross development value (GDV) of RM2.2 billion.

TA Securities welcomed the move by posting a "buy" call for Mah Sing with a higher target price of RM1.76 from RM1.57, on the back of brighter sales prospects.

"We expect M Vertica in Cheras to replicate the group's existing projects such as Lakeville in Taman Wahyu and D'saral Sentral in Sungai Buloh, which have been well-received by first time home buyers, working professionals, young families and home upgraders seeking to live close to the city centre," the report read.

"Meanwhile, the Bukit Mertajam land will provide the group with an opportunity to further strengthen its branding in the development of the group's i-Parc series of industrial properties," it added.

TA Securities also viewed the developer's move of aborting the Shah Alam project as positive as this will pave the way for the group to redeploy its resources to other ongoing property development projects and land banking opportunities.

Echoing the positive sentiment on the scrapping of the Shah Alam deal and Kota Kinabalu Convention Centre project, RHB Research, which has a "buy" call for Mah Sing with a target price of RM1.70, said it is a wise move given the current challenging backdrop of the high-end property segment.

Meanwhile, HLIB Research raised its target price for Mah Sing to RM1.57 from RM 1.56 with a "mildly positive sentiment", as it expects the proposed developments to contribute higher earnings for financial years 2018 and 2019.

The research house also noted that the proposed new development projects are expected to increase the group's revalued net asset valuation (RNAV) by 0.4% or 1 sen per share.

Mah Sing shares were up by 1 sen to RM1.58 yesterday on some 1.23 million shares done, giving it a market capitalisation of RM3.81 billion.