Mah Sing Group Bhd, one of the prime property developers in Malaysia has a total remaining gross development value (GDV) of RM24.9 billion sitting on 837 hectares of the land bank across the country.
The developer launched several projects in the past two years and they have been well received.
Mah Sing is targeting new property sales of RM1.6 billion for the financial year 2021 (FY21) with at least eight new launches. Over 90 per cent of the new launches are priced below RM700,000, and 51 per cent below RM500,000.
The company has acquired two landbanks earlier this year at Sepang and Setapak. Both acquisitions will provide additional GDV of more than RM1.2 billion for Mah Sing.
Rakuten Trade expects the projects to be well received given their strategic location with good accessibility, amenities, and neighbourhoods.
"Demand for Mah Sing's projects remains resilient as the company's recent launches have seen strong take-up rates," it said in a research note.
Mah Sing's projects M Arisa achieved 95 per cent take-up for the first three phases; M Luna 87 per cent for Tower A & B, and M Adora 88 per cent for Tower A & B.
The Carya and Acacia2 projects which were launched in December 2020 have been 95 per cent and 80 per cent sold respectively.
The research firm has a "BUY" call on Mah Sing with a target price of RM1.37 based on sum-of-parts valuations, implying price-to-earnings ratio of 21.4x and 13.9x for FY21 and FY22 respectively.
"Our BUY recommendation is premised on strong sales achieved in the past few quarters, additional contribution from its glove manufacturing business, and attractive dividend yields," the firm noted.
Rakuten Trade expects a core net profit of RM155.6 million and RM239 million for Mah Sing for FY21 and FY22 respectively.
"Mah Sing has been paying a dividend of at least 40 per cent of net profit for the past 15 years. We are forecasting the company to pay a dividend of 3.2 sen and 4.9 sen for FY21 and FY22 translating into yields of 3.9 per cent and six per cent respectively," it said.
The company's glove manufacturing business has commenced operation in April 2021 with the first six lines while the remaining six lines are expected to commence in the third quarter.
The 12 production lines have an estimated total production capacity of up to 3.68 billion pieces of gloves per annum.