THE BUZZ
Mah Sing announced to
Bursa Malaysia that its wholly owned subsidiary Tristar Acres SB has entered
into a sales and purchase agreement to acquire a total 412.365 acres of land
for RM333.26m or approximately RM18.55psf.
This purchase consists of 408.243
acres of freehold land from Boon Siew Development SB for RM330.8m and a
4.122-acre leasehold land from an individual party for RM2.477m.
OUR TAKE
More on the deal. The land is
strategically located in Bandar
Baru Bangi, with prime frontage of up to
2km along both sides of the North South Highway. The land is located just 3.2km
from University Kebangsaan Malaysia (UKM) and or about 30 minutes’ drive from
KL City Centre. Mah Sing is planning a new North South Highway interchange just
2.5km from the existing Bangi interchange to allow direct access to the land.
It intends to develop the land into a township development (to be
named Southville City) with an estimated total gross development value
(GDV) of RM2.15bn. We view this acquisition positively as it is in line with
Mah Sing’s strategy of expanding its landbank and tapping into the strong
demand for properties located in high
growth areas such as Southern Klang Valley. We view the acquisition price of
about RM18.60psf as fair relative to the
recent transacted prices in the area, coupled with the strategic location and potential development
value for the land. With this acquisition, the Group has met approximately 73%
of its 2012 full-year landbanking target of purchasing land for generating a
potential GDV of RM5bn. To meet market demand, Mah Sing is still
actively scouting for more prime land suitable for future developments.
More on Southville City.
Upon completion, the project will be
home to an estimated 17,500 people. The first phase of this gated and guarded
project will provide mainly affordable double-storey link homes priced from
RM530,000 onwards for young families. The later phases will involve properties
for the upgrade market, such as linked semi D and semi-detached houses, as well as bungalows. Close to 70% of
the residential component will be priced below RM1m to meet the strong market
demand for bread and butter properties. About 30% of the development will
comprise of commercial components to complement the
residential aspects of the township. In
line with Mah Sing’s fast turnaround strategy, the master layout and
development order for the mixed development have been obtained. Registration of
interest is expected to commence in 3Q12.
Maintain Buy. We
maintain our forecasts at this juncture as well as our Buy call on Mah Sing at
an unchanged FV of RM2.69, which is based on a 20% discount to our RNAV valuation.
The stock’s relatively inexpensive valuation makes it an attractive value proposition, especially for
investors seeking a
cheaper exposure to mid-sized property stocks
Source: OSK
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