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Mah Sing enhancing franchise value of Icon City

Mah Sing Group Bhd (Nov 3, RM1.99)
Maintain hold with target price RM1.76:
The potential joint venture (JV) with Thailand's largest retail developer Central Pattana to develop and manage the shopping mall in Icon City, Petaling Jaya, should enhance the marketability of the RM3.2 billion project.

We make no change to our earnings forecasts and RM1.76 target price (based on 40% discount to RM2.94 revised net asset value). We maintain a "hold" on Mah Sing Group in anticipation of slower property sales going forward with the peaking of the property cycle.

Mah Sing has entered into a memorandum of understanding with Central Pattana Public Co Ltd to study the possibility of jointly developing and managing the more than one million sq ft retail mall in Mah Sing's Icon City project (comprising retail lots, hotel, retail mall, offices, and serviced apartments).

Central Pattana is a property development and management company that specialises in developing shopping centres, office towers and related real estate projects in Thailand. It is the largest retail developer in Thailand with 16 shopping centres, six office buildings, two hotels and two residential projects in Thailand, including Central Plaza, Central World and Central Festival.

It the JV materialises, will add vibrancy to and enhance the marketability of Icon City. The potential JV will also allow Mah Sing to tap its partner's expertise in managing commercial properties, complementing its existing development businesses. Mah Sing has not decided if Icon City shopping mall will be kept as investment property or outright sales.

Icon City has received strong take-ups since its July 2011 launch. Its i-SoVo (SoHo; RM800 to RM900 psf; 751sq ft and 1,094 sq ft) and 30 jewels (seven to eight- storey shops fronting main road; RM780 psf) experienced brisk sales with 96% to 97% take-up. Its Gourmet street (F&B shop lots; RM1,200 psf; launched in July) take-up is about 40%. The recent soft launch of its Phase 1a serviced apartments also received strong response.

All 120 serviced apartments (RM940 psf) are booked. — Maybank IB Research

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