Company Update - Mah Sing Group Berhad: 26 April 2010


. Proposed acquisition of a prime freehold land: Mah Sing proposition to purchase the piece of land in Ampang, Kuala Lumpur measuring approximately 1.44acres was made through its wholly owned subsidiary, Star Residence Sdn Bhd. The land value was appraised at about RM857.32 per sq ft or total purchase sum of RM53.8mn.

. Strategic location: The land is located at the core of Central Business District (CBD), fronting the main road of Jalan Ampang, KL next to Great Eastern Mall and adjacent to the prestigious Embassy Row. The notable landmark will be KLCC, Pavilion and Ampang point shopping centre, which are just a stone throw away. Other nearby amenities includes 3 international schools, Gleneagles Intan Medical Centre and Ampang Puteri Medical Centre.

. Plan to develop into a service residence i.e. M [email protected] Ampang with an estimated GDV of approximately RM257mn: The ‘M Suites’ will now be Mah Sing’s new brand series. It will offer between mid to high end service residences and condominiums, with its size ranging from 400 sq ft to 1,150 sq ft. Such small/medium sized upmarket serviced residences should be appealing to the increasing cosmopolitan lifestyle of local urban Malaysians and foreigners who intend to live near the KLCC Park.

With pricing at RM300K onwards which translates into RM750psf and planned total units of about 500, we can expect an overwhelming take up rate. The proposed development should kick start in 2H10.

. Outperform: We had revised downwards our RNAV per share to RM2.21 per share after taking into account of their enlarged share capital following the recent 1 for 5 bonus issues. We like Mah Sing for their good track record. YTD they have sold RM516mn of their RM1.0bn target sales in 2010. Garden Residences, Perdana residences 2, Iparc Bukit Jelutong and Starparc Point contributed 93.5% total sales achieved. We believed they are well in line to achieved RM1bn sales target. We recommend Outperform with our target price at RM2.20 based on PER of 13X and EPS of 17sen.
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