MAHSING: Property Developer Poised for Re-rating Amid Strong Fundamentals and Growth Prospects

TA Securities has reiterated its “BUY” recommendation for the property developer, assigning a target price of RM0.25, representing a significant 25.0% upside from its last traded price of RM0.20. The investment bank believes the company’s recent share price decline in 2025 has been overly punitive, failing to reflect its robust underlying fundamentals and compelling growth trajectory.

Performance Review and Financial Strength

The property developer’s core operating fundamentals remain solid. For FY25, property sales are well on track to meet its RM2.65 billion target, having achieved 72% of full-year sales by the nine-month mark. This strong performance is complemented by an impressive RM3.14 billion in unbilled sales, an eight-year high, providing excellent earnings visibility stretching into 2026. The company maintains a healthy balance sheet with net gearing at a comfortable 0.25x and a substantial cash reserve of RM1.17 billion, ensuring ample headroom for ongoing developments, strategic land acquisitions, and sustained dividends. Notably, the group was highly active in land acquisitions in 2025, replenishing RM6.4 billion in Gross Development Value (GDV) without straining its balance sheet, underscoring its capacity for sustained launches and earnings growth beyond 2026.

Addressing Past Challenges

The company’s share price experienced a significant sell-down in 2025, retracing approximately 46% from its yearly high. This correction was primarily driven by negative sentiment surrounding its Bridge Data Centre (BDC) collaboration and global AI-chip restrictions. Concerns arose regarding the potential peak of AI hardware intensity and tighter US AI-chip export restrictions, alongside market anxiety following the lapse of exclusivity for the Southville DC hub agreement. However, TA Securities asserts that these “fear-driven de-rating” factors are now largely priced into the stock, effectively disconnecting the share price from its true fundamental value.

Future Outlook and Strategic Growth Levers

The outlook remains positive, with the company identified as a “Top Pick” for 2026. Its landbanking strategy is increasingly aligned with major transit-oriented developments (TODs) such as M Grand Minori near the Johor Bahru-Singapore RTS and M Cora near the upcoming Penang LRT, promising improved connectivity and sustainable residential demand.

Furthermore, its exposure to the digital economy, particularly data centres, remains a key option. While previous DC collaboration agreements have lapsed, the company retains control over strategic land and is evaluating outright land sales or build-to-lease (BTL) structures, offering potential incremental upside not yet reflected in current valuations. The group is also strengthening its industrial expansion through a joint venture with KLK Land in Kulai, Johor. This initiative, which includes the development of MS Industrial Park @ Kulai targeting advanced manufacturing, logistics, and data centres, is set to provide a scalable platform for earnings diversification, with a maiden launch anticipated in 2027 as part of a RM2.26 billion GDV industrial development over the next 8-10 years.

Investment Rationale

Given the company’s robust earnings visibility, strong balance sheet, and multiple structural growth catalysts, TA Securities concludes that its current valuation is unduly compressed. The investment bank sees clear scope for a fundamentally driven re-rating into 2026, making it an attractive asymmetric risk-reward entry point.