KUALA LUMPUR (Oct 20): Mah Sing Group Bhd continued to march higher this morning, gaining 18.5% or 23 sen to RM1.47,  just a whisker away from the highest target price (TP) pegged by analysts.

Mah Sing is currently trading at a two-year high, boosted by its venture into rubber glove production.

The property stock, which announced diversification into glove manufacturing, was the second most active and among the top five gainers, with 209.57 million shares traded.

At 9.55am, the counter had pared some gains to RM1.35, still up 11 sen or 8.87%. The counter has jumped 84.93% since its announcement on diversifying into rubber glove production.

Its market capitalisation rose to RM3.28 billion this morning, from RM1.78 billion last Thursday.

The stock's price has exceeded almost all analysts' TPs except for Aminvestment Bank's fair value (FV) of RM1.50.

Hong Leong Investment Bank (HLIB) Research analyst Andrew Lim Ken-Wern said in a note today that he remained positive on Mah Sing’s venture into the glove business as it diversifies its earnings base from being reliant on the property market, which is experiencing a slowdown.

The move also allows the company to ride on increased global demand for gloves moving forward, said Lim.

“Ideally, Mah Sing would be able to tap into its expertise and know-how of its regional plastic business in order to synergise with this potential venture,” he added.

Lim revised up his forecasts for Mah Sing by 47.6%/63.4% respectively for the financial year ending Dec 31, 2021 (FY21) and FY22 as he imputed the earnings impact of the glove venture into his estimates, while lowering his FY20 earnings forecast by 10.3%.

He maintained his "buy" call for the counter, with a higher TP of RM1.41 from 85 sen previously.

“Our 'buy' call is premised upon commendable take-up of its recent launches, its cover ratio of 1.1 times to provide earnings visibility and minimum dividend payout ratio of 40%, coupled with its venture into gloves, which will provide a meaningful boost to earnings for FY21-22 after taking into account its contributions,” he said.

To recap, Mah Sing last week announced that it will acquire 12 new glove production lines that are expected to yield an estimated production capacity of up to 3.68 billion pieces of gloves a year.