Mah Sing’s RM260m Corus Hotel land deal pricey but reasonable at RM4,019 psf—analysts

• Mah Sing plans to redevelop the land into high-end serviced apartments with an estimated gross development value (GDV) of RM1.28 billion.

KUALA LUMPUR (Aug 8): Mah Sing Group Bhd’s (KL:MAHSING) RM260 million acquisition of the Corus KLCC Hotel land in Kuala Lumpur comes at a premium price, but analysts believe it is a strategically sound move that could enhance the company’s near-term earnings and long-term growth prospects.

The 1.485-acre freehold site, located along Jalan Ampang and within walking distance of the Petronas Twin Towers, is being acquired from Malayan United Industries Bhd (KL:MUIIND). Mah Sing plans to redevelop the land into high-end serviced apartments with an estimated gross development value (GDV) of RM1.28 billion.

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Mah Sing acquires Corus Hotel site for RM260m, plans KLCC serviced apartments with RM1.28b GDV

The purchase price translates into RM4,019 per square foot (psf), which is at the higher end of the RM3,500 to RM4,100 psf range recorded in the Kuala Lumpur City Centre area over the past decade. However, MBSB Research pointed out that the land cost makes up only 20% of the project’s GDV—a ratio considered reasonable in property development. The project is expected to yield a healthy profit margin of around 20%.

Analysts expect the acquisition to have limited immediate impact on Mah Sing’s stock performance. MBSB Research nudged its target price up by two sen to RM1.51 per share, while CGS International maintained its target price at RM1.75 pending the project’s execution and completion.

Post-acquisition, Mah Sing’s net gearing is projected to rise modestly from 17% to between 19% and 23%. Analysts believe this level remains manageable, supported by the group’s strong operating cash flow.

Mah Sing’s shares were unchanged at RM1.20 at the time of writing on Friday, giving the company a market capitalisation of RM3.07 billion.

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