After Mah Sing hit RM2.12 billion sales in the financial year 2022, property sales momentum continued to be encouraging this year. It was reported that the M Vertica project in Cheras and M Astra in Setapak saw very encouraging take-up rates in Dec 2022 and Mar 2023, prompting the group to open up for sale the final tower in both projects.
Management alluded that industry loan approval rate has improved, resulting in better conversion of bookings into contractual sales for the company.
RHB Research (RHB) in the recent Small Cap ASEAN Research Report expects a gradual improvement for the group’s glove division. They understand that industry average selling price has started to bottom out and stabilise at around USD21/1k pieces for standard gloves, and at the same time, the group is also implementing some cost containment measures.
Hence, as volume improves, RHB believes the losses for the manufacturing division will narrow down faster, while the plastic manufacturing business remains steady.
Management is likely to purchase more land parcels for development after acquiring the Puchong land in January. This will likely be an upside catalyst for the group’s revalued net asset value as its M series projects have been quite successful, and therefore landbank turnaround time will be fast and efficient.
RHB is hopeful that the collaboration with the China Electronics Chamber of Commerce (CECC) can progress further and potentially lead to the group’s greater involvement in industrial property development.
During the recent China visit, Mah Sing Group Managing Director Tan Sri Leong Hoy Kum showed support and the group will cooperate with CECC members, from sourcing for land, the setting up of production facilities to the export of goods for international markets.
RHB understands that CECC has about 40k members, and given the ongoing US-China trade war, Malaysia may benefit as some manufacturers based in China have decided to relocate.
This potential tie up may open up opportunities for the group to expand its industrial development in future, and this segment is now gaining traction in the real estate industry.
RHB thinks Mah Sing should trade at this pre-pandemic valuation, given its healthy sales momentum, more land banking, and potential rebound for gloves’ average selling price.
