Mah Sing acquires land in mainland Penang

Mah Sing acquires land in mainland Penang
Business & Markets 2013
Written by MIDF Research
Thursday, 12 December 2013 09:26

Mah Sing Group Bhd
(Dec 11, RM2.22)
Maintain buy at RM2.20 with a target price of RM2.62: A wholly-owned subsidiary of Mah Sing Group Bhd has entered into four separate sale and purchase agreements (SPAs) to acquire 20 pieces of contiguous freehold land in Jawi, Penang.

The parcels measure 76.38 acres (30.91ha) in aggregate and were transacted for a total consideration of RM42.6 million. At RM12.80 per sq ft, pricing appears to be reasonable, accounting for 10.6% of the potential gross development value (GDV) of RM400.0 million.

The purchase consideration will be staggered over 18 months. Hence, funding for the acquisition will not be an issue. Gearing level is likely to be maintained at below 0.5 times.

Besides having easy connectivity, the land is surrounded by a host of schools and higher learning institutions. Among them are Universiti Sains Malaysia’s Engineering Faculty, Institute Latihan Kecemerlangan Mara Jawi, SJK (C) Sin Hwa, SMK Jawi, SMK Seri Nibong, SMK Saujana Indah, SMK Teknik Nibong Tebal and SMK Methodist. There are also plans by Penang Development Corp to establish a Premium Outlet, an international theme park, a golf resort, and SME villages in the Batu Kawan area. These retail and recreational developments should increase demand for housing in the area.

Mah Sing plans to put up a mixed township development called Southbay East (SE) on the acquired site. It will consist of residential (link homes, linked semi-detached homes, semi-detached homes and town houses) and commercial segments, as well as a clubhouse. SE is expected to be developed over the next three to four years.

With the mature township of Nibong Tebal located a short 4km away, Mah Sing’s target market consists of “upgraders” from existing Nibong Tebal housing schemes such as Residensi Merbok, The Golf Garden, Taman Jawi Jaya, Taman Sungai Jawi, Taman Jawi Permai and Taman Jawi Indah.

The working population from Seberang Prai’s commercial and industrial areas of Batu Kawan, Nibong Tebal, Bukit Minyak, Bukit Tengah and Penang Science Park are another source of potential buyers.


The Jawi land acquisition is the sixth land deal for Mah Sing in FY13 ending Dec 31. We are positive on the land acquisition as Mah Sing could capture demand for higher-end gated and guarded properties in a mature catchment area.

In addition, the new industrial and commercial sites that have mushroomed in Batu Kawan and other nearby industrial zones are also expected to create job opportunities, hence they form a good base of potential house buyers.

We are maintaining our target price at RM2.62, by ascribing price-earnings ratio (PER) of 10.2 times against FY13 earnings per share of 25.6 sen. PER of 10.2 times is a 10-year historical average. — MIDF Research, Dec 11


This article first appeared in The Edge Financial Daily, on December 12, 2013.