|A satellite image of the land Mah Sing has proposed to acquire in Puchong. It is located in one of the biggest catchment areas in Puchong.|
KUALA LUMPUR: Mah Sing Group Bhd’s mixed development slated for the Puchong land that it proposed to acquire yesterday will increase the group’s gross development value (GDV) and unbilled sales by approximately 23% to RM50 billion and bring about earnings visibility for the next eight to 10 years.
The project has an estimated GDV of RM9.3 billion. Mah Sing has proposed to acquire the 88.7-acre (35.9ha) tract in Puchong for RM656.9 million or RM170 per sq ft (psf) from Huges Development Sdn Bhd.
Mah Sing was granted a four-year deferred term on the purchase, whereby 10% of the consideration will be paid upon the signing of the agreement, with the balance 90% stretched over 48 months.
According to a filing with Bursa Malaysia yesterday, Mah Sing said its wholly-owned subsidiary Mah Sing Group Ventures Sdn Bhd had signed a memorandum of understanding (MoU) with Huges Development to purchase or form a joint venture on a nearby piece of land measuring 170.58 acres.
The MoU will last for four years. During the MoU tenure, Huges Development will negotiate first with Mah Sing Ventures for development plans on the land, “failing which, Mah Sing Ventures shall have the first right of refusal for any arrangement in respect of the subject land”.
As for the 88.7-acre land, Mah Sing said it plans to develop serviced residences, office towers, shop offices, retail lots, a retail mall and a hotel there. The development of the project, work on which is expected to begin next year, will stretch over a period of 10 years.
According to Mah Sing, the units will cater to a full range of customers and will appeal to the mass market and medium- to high-income households. For the serviced residences, prices will start from RM585,000, it said.
Based on satellite images provided in the filing, the land Mah Sing has proposed to purchase is located in the vicinity of IOI Mall, and is in one of the biggest catchment areas in Puchong.
Mah Sing said the terrain is “generally flat” with its status currently industrial.
Mah Sing also said the land is easily accessible via several highways, adding that various modes of transport will also be available in a couple of years.
“With the proposed acquisition, the group will have earnings visibility for eight to 10 years, thus providing greater clarity to shareholders on the earnings sustainability of the group,” it said, adding that its land bank will increase to approximately 3,720 acres from approximately 3,631 acres currently.
Analysts are positive on over the purchase, given that the price is deemed reasonable for a mature market.
RHB Research Institute’s Loong Kok Wen is positive on Mah Sing’s purchase because of the demand for properties in Puchong.
“The price is reasonable and it is similar to the price that Hua Yang Bhd paid in October 2012 at RM124 per sq ft,” RHB Research property analyst Loong Kok Wen told The Edge Financial Daily.
“However, Mah Sing’s proposed purchase is situated much closer to IOI Mall than the land Hua Yang bought.”
Loong, however, said Mah Sing’s proposal to sell the property on the land at about RM650 psf seems a tad pricey, given that it will be a high-rise development.
“But based on the popularity of Mah Sing’s Lakeview Residences, I think the group will package the property in a similar fashion by providing furnishing to [make them more] appealing to buyers,” said Loong.
She said while RHB has raised its fair value on Mah Sing to RM2.71 from RM2.58 after this purchase, the research house believes that Mah Sing’s rerating hinges on the status of its proposed RM359.557 million land purchase in Rantau, Negeri Sembilan. RHB has retained its “neutral” call on Mah Sing.
Mah Sing said on Tuesday that the land in Rantau, measuring 1,051 acres, has a caveat lodged on it and that it will evaluate its options.
This article first appeared in The Edge Financial Daily, on August 29, 2014.
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