THE STAR. 7TH NOVEMBER: Affordable housing is expected to drive Mah Sing Group Bhd’s prospects despite the cautious outlook on the overall property sector.
According to Kenanga Research, the property group’s strong position in the affordable housing sector offers a promising outlook for continued growth and success in meeting the housing needs of this demographic.
“We see a sweet spot in affordable homes driven by household formation, urban migration and the trend towards nuclear family (versus extended family), on which Mah Sing can capitalise with its M series products,” the brokerage wrote in its report, following a recent briefing with the company’s management.
Kenanga Research noted that Mah Sing’s strong presence in the affordable property segment was evidenced by the take-up rate of at least 90%, particularly for their M series, showcasing the strong interest in its affordable offerings.
“We gathered that approximately 65% of buyers are aged 35 years or younger,” it said, adding that Mah Sing might not be ready to explore the luxury property market at the moment.
Affordable housing is expected to drive Mah Sing Group Bhd’s prospects despite the cautious outlook on the overall property sector.
According to Kenanga Research, the property group’s strong position in the affordable housing sector offers a promising outlook for continued growth and success in meeting the housing needs of this demographic.
“We see a sweet spot in affordable homes driven by household formation, urban migration and the trend towards nuclear family (versus extended family), on which Mah Sing can capitalise with its M series products,” the brokerage wrote in its report, following a recent briefing with the company’s management.
Kenanga Research noted that Mah Sing’s strong presence in the affordable property segment was evidenced by the take-up rate of at least 90%, particularly for their M series, showcasing the strong interest in its affordable offerings.
“We gathered that approximately 65% of buyers are aged 35 years or younger,” it said, adding that Mah Sing might not be ready to explore the luxury property market at the moment.
Kenanga Research said it was cautious on the overall property sector due to the persistent oversupply, elevated interest rates, sustained high inflation and subsidy rationalisation that might erode spending power of certain consumer groups.
However, affordable homes, particularly those priced at RM500,000 and below in the Klang Valley, Johor and Penang, which were highly sought after by first-time house buyers, would likely do well.
Kenanga Research maintained its “overweight” rating on Mah Sing, with a higher target price of RM1, compared with 80 sen previously.
The higher target price was based on a 50% discount to Mah Sing’s revalued net asset value, compared with 60% previously. This was lower than the average of 60% Kenanga Research accorded to its peers with significant exposure to the high-end residential and commercial segments.
“We like Mah Sing for its lifestyle-focused products providing ease of entry for first-time house buyers; efficient land bank management and fast turnaround time which minimises carrying costs; and low net gearing of only 0.12 times as at the end-June 2023, enabling it to gear up significantly to acquire new land banks as and when opportunities arise,” Kenanga Research explained.
It said Mah Sing’s low gearing puts the company in a good position for future land acquisitions.
To date, Mah Sing had a land bank of over 2,000 acres and gross development value of RM24bil.
Meanwhile, the company’s industrial property segment was experiencing robust demand, as evidenced by its impressive take-up rate of 90%.
Kenanga Research said Mah Sing’s 2023 sales target of RM2.2bil did not include industrial properties, suggesting growth potential beyond the residential portfolio.
Nevertheless, the brokerage pointed out that while Mah Sing’s property segment was experiencing positive trends, its glove operations under the manufacturing segment would likely be scaled down to mitigate losses until the point where average selling prices become more favourable.