Investment Highlights

• We maintain BUY on Mah Sing Group (Mah Sing) with an unchanged SOP-based fair value of RM0.95/share and a neutral ESG rating of 3 stars.

• Mah Sing’s FY21 new sales of RM1.6bil (+45% YoY) came in within expectations and as guided earlier, underpinned by the group’s strong execution model and residential projects targeted at strategic locations together with savvy pricing schemes according to market demand. None of these developments were affected by the recent floods.

• The strong sales mainly stemmed from the affordable M Series developments located in Klang Valley. High-rise products including M Centura in Sentul, M Vertica in Cheras and landed properties M Aruna in Rawang have received a take-up rate of more than 90%.

• Majority of the products are priced below RM500K (51%) while 40% are priced RM500K–700K. The attractive pricing strategy has gained substantial interest from first-time home buyers who are below 35 years old (66%).

• Moving into 2022, Mah Sing plans to launch projects worth RM2.4bil (+71% YoY). Recall that the company has successfully launched products worth RM1.4bil in FY21.

• There are 21 projects in the pipeline with the upcoming launches focused mainly in Klang Valley including M Senyum in Sepang, M Astra in Setapak and M Nova in Kepong. 60% of the products will be priced below RM500K while 34% are priced between RM500K and RM700K. Meanwhile, the company is also eyeing potential new developments in other states such as Perak, Negeri Sembilan and Melaka.

• On its glove manufacturing front, a total of 12 lines are fully operational with a maximum production capacity of 3.7bil pieces of gloves per year. The company has also obtained the FDA 510K, Health Canada Medical Device Licence and Certificate of European Union Medical Device Regulation (EU-MDR) for medical gloves to be exported to the United States, Canada, the EU and EEA territories.

• We remain positive on Mah Sing’s property sales trajectory and glove manufacturing capacity expansion given the group’s quick turnaround business model and higher selling price of medical gloves to key markets, which support the group’s future earnings.

• The stock currently trades at an attractive FY22F PE of only 6x vs. its 5-year average of 12x.

Source: AmInvest Research - 10 Jan 2022