Broker: UOB Kay Hian
Date of Report: Tuesday, 03 June 2025

Mah Sing Group Bhd: Strong Residential Sales Anchor Growth Amid Data Center Delays – 2025 Outlook and Valuation Update

Overview: Mah Sing Group’s 1Q25 Performance in Focus

Mah Sing Group Bhd (MSGB), one of Malaysia’s leading property developers renowned for its quick-turnaround strategy, has delivered its 1Q25 results in line with market expectations. The company continues to demonstrate resilience in its core property segment, while navigating delays in its data center (DC) ventures. Despite challenges, Mah Sing maintains a robust outlook for 2025, underpinned by strong residential demand and a well-executed launch pipeline.

Stock Profile and Market Highlights

• Sector: Real Estate
• Share Price: RM1.02
• Target Price: RM1.46 (down from RM2.29)
• Upside Potential: +43.1%
• Market Capitalization: RM2,611.3m (US\$613.5m)
• Shares Issued: 2,560.1 million
• 52-week Range: RM1.97 / RM1.01
• Notable Shareholders:
  • Mayang Teratai: 32.5%
  • Amanah Saham Nasional: 7.5%
  • Bank of Singapore: 6.1%
• FY25 NAV/Share: RM2.35
• FY25 Net Debt/Share: RM1.87

Key Financial Highlights: 1Q25 Results Snapshot

• Net gearing ratio stable at 0.2x as of end-March 2025, reflecting healthy cash generation.
• Core net profit of RM63.5m in 1Q25 represents 19% of UOBKH and 22% of consensus full-year forecasts.

Strong Sales Momentum in Residential Segment

• 5M25 sales reached RM1.01 billion (+2% YoY), achieving 38% of the RM2.65 billion full-year target.
• Key contributors:
  • M Tiara (20%)
  • M Legasi (19%)
  • M Nova (15%)
  • Meridin East (13%)
• Project launches totaled RM1.18 billion in 5M25 (36% of the RM3.3 billion full-year plan).
• Upcoming launches in 2H25 include M Legasi, additional landed-linked homes in Meridin East, M Grand Minori, and M Zenni in Penang.
• Strong registration of interest for M Grand Minori, located just 3km from the upcoming RTS link.
• Unbilled sales as of end-March 2025: RM2.7 billion (unchanged from end-2024).

Data Center (DC) Land: Opening Up New Opportunities

• The exclusivity period for the 17.55-acre DC land at Southville City with Bridge Data Centres (BDC) expired on 30 May 2025.
• BDC retains exclusivity only for a separate 35.68-acre plot until 28 Oct 2025.
• Mah Sing declined BDC’s extension request due to lack of commitment for a definitive agreement.
• The land is now infra-ready, with confirmed electricity, water, and dark fiber approvals. A 500MW electricity supply agreement is ready for execution with Tenaga Nasional.
• Offer letters have been issued to two DC players for the sale of 42-acre Meridin East land.

Manufacturing Segment: Gradual Recovery

• Core operating loss narrowed to RM1 million in 1Q25 (from -RM2 million in 1Q24), supported by higher revenue of RM113 million (up from RM99 million in 1Q24).
• Jakarta plastic pallet plant turned profitable after last year’s expansion.
• Glove sales volume rebounded in 2Q25, following a weak 1Q25 due to U.S. clients frontloading Chinese-made gloves ahead of tariffs effective 1 Jan 2025.

Earnings Revision and Target Price Outlook

• 2025 and 2026 earnings forecasts cut by 14% and 27% respectively, as potential DC land sale gains are excluded due to collaboration model changes and uncertain timing.
• Target price revised downward to RM1.46 (from RM2.29), using SOTP valuation and a 40% RNAV discount, consistent with Mah Sing’s five-year average.
• Implied PE for 2025-2027F: 11-12x (peer average: 22x); Mah Sing trades at a 2025F PE of 9x and P/B of 0.6x, reflecting attractive valuation.

Key Financial Forecasts and Metrics (2024-2027F)

Cash Flow and Leverage Trends

Valuation: Sum-of-Parts (SOTP) Breakdown

ESG (Environmental, Social, Governance) Updates

• Environmental: GreenRE Bronze certification awarded to M Minori, M Panora, M Astra, and others.
• Social: M Adora achieved 2,200,000 man-hours without any incidents.
• Governance: Strong transparency with anti-bribery and anti-corruption policies in place.

Investment Summary and Outlook

Mah Sing Group remains a solid BUY despite the revised target price and ongoing delays in the data center segment. The company’s core property business continues to deliver, supported by strong sales, healthy unbilled sales, and a robust launch pipeline. Manufacturing, especially the glove segment, is expected to improve further in 2H25. With an undemanding valuation (2025F PE: 9x, P/B: 0.6x) and a consistent dividend yield, Mah Sing offers attractive upside for investors seeking exposure to Malaysia’s property and manufacturing sectors.

Key Takeaways for Investors

• 1Q25 results confirm steady core growth and cash generation.
• Residential property remains the growth anchor, with strong sales and well-received launches.
• DC land now open to a broader range of buyers, potentially unlocking value in the near future.
• Manufacturing recovery and expanding glove sales support earnings diversification.
• Attractive valuation metrics and robust ESG credentials enhance investment appeal.