Hot Stock Mah Sing rises on Seremban land acquisition, RM7.5b development

by **Cals** Tue 12 Aug 2014, 22:56

Hot Stock Mah Sing rises on Seremban land acquisition, RM7.5b development

Business & Markets 2014

Written by Gho Chee Yuan of theedgemalaysia.com

Tuesday, 12 August 2014 12:30

KUALA LUMPUR (Aug 12): Shares of Mah Sing Group Bhd rose one sen or 0.42% to RM2.38 following the company's announcement on plans to develop a gated-and-guarded township in Seremban, Negeri Sembilan.

At about 10.49am, Mah Sing was traded at RM2.38 with 233,800 units changing hands. Earlier, Mah Sing shares climbed to a high of RM2.40 before settling at RM2.38 at 12.30pm.

In a filing with Bursa Malaysia yesterday, Mah Sing said it would embark on a new township on the 960-acre (388.5ha) prime freehold land in Seremban. The township has at an estimated gross development value (GDV) of RM7.5 billion.

Mah Sing said its unit Grand Prestige Development Sdn Bhd yesterday signed an agreement with three individuals to acquire the Seremban land for RM359.56 million, or RM8.60 per sq ft, cash. The vendors, Poh Yong Cak, Lim Kim Chong and Sam Chien Kiong, are the surviving trustees of the land.

The proposed acquisition is expected to be completed in the first half of 2015.

Analysts are optimsitic about Mah Sing's Seremban project. In a note to clients today, Hong Leong Investment Bank analyst Sean Lim said Mah Sing's township would be a significant project as it would be the group’s largest project by GDV.

The Seremban project is expected to boosts Mah Sing's balance GDV by 26% to RM36.4 billion, according to Lim .

"However, earnings impact is unclear at this juncture as MSGB (Mah Sing) has yet to firm up the GDV for the inaugural phase, which it targets to launch by mid-2015," he said.

HLIB is positive on the acquisition as it gives Mah Sing exposure to the growth corridor of Seremban.

"Moreover, the RM8.60 psf land cost is fair as it is less than half of the RM18.55 psf MSGB paid for its land in Southville in 2012, and makes up less than 5% of overall GDV," Lim said, adding that the competitive pricing of its double storey terrace houses at RM350,000 each should help Phase 1 see healthy take-up rates.

Lim sees the risks Mah Sing may face include slower-than-expected sales, execution risks for projects and inability to replenish landbank.

Lim has maintained Hong Leong's "buy" call on Mah Sing shares with a higher target price increase of RM2.65 versus RM2.45 earlier.

"Our new target price values MSGB at 9.7 times price-earning ratio (PER) which remained below its historical 5 years PER average of 11.1 times," Lim said.