Mah Sing Group Bhd (Mah Sing) one of the prime property developer in Malaysia with a total remaining GDV (gross development value) of RM24.9bn sitting on 2,050 acres of landbank. The company has launched several projects in the past 2 years and have been well received. In October 2020, Mah Sing ventured into rubber glove manufacturing business by building 12 production lines with an estimated total production capacity of up to 3.68bn pieces of gloves per annum. We expect Mah Sing to register core net profit of RM155.6m and RM239.0m for FY21 and FY22 respectively. BUY with a target price of RM1.37 based on SOP (sum of parts) valuations, implying PER of 21.4x and 13.9x for FY21 and FY22 respectively. Mah Sing has been paying dividend of at least 40% of net profit for the past 15 years. We are forecasting the company to pay dividend of 3.2sen and 4.9sen for FY21-FY22 translating into yields of 3.9% and 6.0% respectively.

Mah Sing is targeting new property sales of RM1.6bn for FY21 with at least 8 new launches. Over 90% of the new launches are priced

The company’s glove manufacturing business has commenced operation in April 2021 with the first 6 lines while the remaining 6 lines are expected to commence in 3QCY2021. We believe the demand of glove will remain stable post-Covid-19 due to heightened awareness and more stringent regulations.

Our BUY recommendation is premised on: (i) strong sales achieved in the past few quarters; (ii) additional contribution from its glove manufacturing business; and (iii) attractive dividend yields.

Source: Rakuten Research - 5 Aug 2021