Mah Sing Group Bhd (Mah Sing) one of the prime property developer in Malaysia has a total remaining GDV (gross development value) of RM25bn over 2,051 acres of landbank. The company has launched several projects in the past 2 years with strong take up rates. Meanwhile, the company’s glove division has received the US Food and Drug Administration (FDA) approval to market nitrile examination gloves in the United States. We revised our FY21 net profit downwards by 28% to RM110.6m due to the lower production volume in glove manufacturing division because of operating restrictions during EMCO and NRP. BUY with a target price of RM1.25 based on SOP (sum of parts) valuations. 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 2.3sen and 4.5sen for FY21-FY22 translating into yields of 3.2% and 6.4% respectively.

Mah Sing has achieved 80% of its 2021 sales target in 9MFY21. Over 90% of the new launches are priced <RM700k, and 51% <RM500k. Meanwhile, the company has acquired 3 landbanks in 2021 at Sepang, Setapak and Kepong. These acquisitions will provide additional GDV of about RM2.0bn for Mah Sing and we expect them to be well received given their strategic location with good accessibility. Demand for Mah Sing’s projects remains resilient as the company’s recent launches have seen strong take up rates such as M Arisa (97% for first 3 phases); M Luna (90% Tower A & B); M Adora (90% Tower A & B). The Carya and Acacia2 projects which were launched in December 2020 have been 97% and 80% sold respectively. As of 9MFY21, the company has unbilled sales amounting to RM2bn

As for the glove division, management guided higher production efficiency going forward as all 12 production lines are expected to complete commissioning by December 2021. 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 with unbilled sales of RM2bn; (ii) additional contribution from its glove business; and (iii) attractive dividend yields.

Source: Rakuten Research - 9 Dec 2021