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KUALA LUMPUR: Mah Sing Group Bhd's latest land deal has won the thumbs-up from analysts as development rights to the 4.08-acre (1.63ha) parcel that formerly housed the Pekeliling flats, give the group potential access to a larger piece of prime landbank in the Klang Valley.
"We are positive on the deal. We strongly believe Mah Sing would be able to secure other development rights for the remaining 53.9 acres of concession land for the ease of project coordination and management," TA Securities said on Wednesday, Aug 3.
On Tuesday, Mah Sing had announced a 60:40 urban redevelopment joint venture with Asie Sdn Bhd to undertake a niche project named M Sentral on the 4.08-acre parcel along Jalan Tun Razak-Jalan Pahang, with a potential gross development value (GDV) of RM900 million. The parcel is part of a 58-acre land with an estimated RM9 billion GDV in which Asie has been granted full rights and approvals for a mixed development.
"We are encouraged by this acquisition as it will enhance earnings and should be the first in a series of landbanking deals for 2H," CIMB Research said in a report.
There is a provision for a skybridge to connect Mah Sing's parcel to the rest of the 58-acre site in line with the understanding that the property developer may be the JV partner for other parcels of the land.
CIMB Research raised its FY12-13 earnings per share (EPS) forecasts by 8% to 15%. This would increase its target price from RM3.30 to RM3.55 based on target market price earnings multiple of 14.5 times.
Similarly, TA Securities raised its earnings forecast for Mah Sing by 0.63% for FY12 and 3.1% for FY13 after imputing higher sales assumptions of RM300 million for FY12 and RM400 million for FY13, with a 20% profit margin.
For 1QFY11 ended March 31, Mah Sing made a net profit of RM41.2 million, a 48% year-on-year increase from RM27.9 million in the previous corresponding quarter. Revenue rose 31% to RM311.8 million from RM238.3 million previously.
Mah Sing share price rose three sen or 1.2% to RM2.47 in intra-day trade before ending unchanged at RM2.44 amid weakness in the broader market.
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