KUALA LUMPUR: Mah Sing Group Bhd's data centre land transaction of RM200 per square feet (psf) was a record high for Malaysia, according to Hong Leong Investment Bank Research.
Mah Sing yesterday signed a second collaboration agreement with Bridge Data Centres (BDC) for an additional 200MW power capacity on a 14.6 hectare land (Plot 3a and 3b) in Mah Sing's DC Hub @ Southville City for hyperscale or artificial intelligence-data centre (AI-DC) customers.
This will bring BDC's total power capacity at the DC Hub to 300MW.
The business structure remains the same as the previous partnership, where Mah Sing will sell the land to the joint venture, contributing it as equity.
Mah Sing intends to hold a 20-30 per cent stake to enable equity accounting.
HLIB Research said the value of the 14.6 hectare land is set at RM310.8 million or RM200 psf, which is higher than the RM160 psf of the first partnership.
"At RM200 psf, this marks a record high for DC land transactions in Malaysia," HLIB Research said.
The land sale, targeted for completion by the second quarter of 2025, had a historical acquisition cost of RM18.50 psf 10 years ago.
"Including the infrastructure and holding costs, we estimate the current land cost to be around RM45 psf. Thus, we estimate the net land sale gain to be around RM250 million (57.7 per cent net profit margin). After accounting for Mah Sing's estimated 20 per cent joint venture stake, the net gain for Mah Sing is about RM200 million, which is around 74.8 per cent of our FY25 net profit forecast," HLIB Research said.
The firm maintained its 'Buy' call on Mah Sing with a raised target price of RM2.05 a share.
Meanwhile RHB Research raised its target price for Mah Sing by 52 per cent to RM2.70 on the strength of the deal.
The firm expects Mah Sing's financial year 2025 (FY25) earnings to see a quantum leap, boosted by land disposal gain to the joint venture while FY26 forecast earnings will see the maiden contribution from BDC's first 100MW.
RHB Research has raised its FY25F earnings for Mah Sing by 30 per cent on the strength of core earnings from property development, and the gloves manufacturing segment breaking even next year given the expected recovery in average selling price.
"Based on a 40 per cent dividend payout, FY25F dividend per share could hit six sen. Note, we only factor in minimal income from the DC investment in FY26F due to the usual low capacity in the initial stage as well the timing of commencement," RHB Research said.