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Mah Sing’s mid- to long-term outlook to remain positive for FY21

Mah Sing Group’s mid-to-long-term outlook remains positive for financial year 2021 (FY21), on the back of strong sales achieved in the last few quarters and the upcoming glove production business’ positive contribution to its FY21’s earnings and beyond.
In a research note today, AmInvestment Bank lauded the group’s quick turnaround business model that launches new projects swiftly and offers potential upside of over 50 per cent at its current share price.
On the property projects, the investment bank said Mah Sing has lined up several launches for this year and indicated that more than 75 per cent of them would be in the affordable segment.

“In the central region, it will roll out the remaining phases of M Arisa Sentul service apartments; M Vertica, Cheras Tower E serviced apartments; Southville City, Bangi Cerrado Tower C serviced apartments; Sensa Tower B serviced apartments as well as M Aruna and M Residence, Rawang link-homes,” it said.

Additionally, the group would also launch the Southbay City serviced apartments in Penang and Meridin East link-homes in Johor.
On the group’s glove manufacturing business which would commence production in April 2021, the research house believed demand for gloves would remain stable post-COVID-19 due to heightened awareness and more stringent regulations.

“We reckon that the average selling price (ASP) would decline after 2021 as there is no longer a rush for gloves compared to what happened at the beginning of the pandemic,” it said.

However, the research house expected the ASP to stabilise at a higher level than the pre-pandemic level due to the broader usage of gloves.
“Hence, we cut our FY22 net profit forecast by 34 per cent to reflect the lower ASP of gloves to US$30 per 1,000 pieces from US$40 per 1,000 pieces while making no changes to our FY20-FY21 numbers,” it said.

Given the projection, AmInvestment Bank has maintained its ‘buy’ call on Mah Sing with a lower fair value of RM1.27 per share based on its sum of parts (SOP) valuation.

Mah Sing added that the new glove business, which targets the export market, allowed the group to ride on the booming glove manufacturing segment and further strengthen its manufacturing division, which is currently focusing on the plastics business.

Source: EdgeProp.my

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