PETALING JAYA: The outlook for MSM Malaysia Holdings Bhd
is expected to remain challenging, as the lower demand for refined sugar in an overcapacity industry will take a longer time for the group to turn around its business from a loss position.
CGS-CIMB in a report yesterday said it was slashing MSM’s 2020 to 2022 core net profit estimates from 49% to 239% to reflect lower refining margins for the company.
“The concerns of weaker sales volumes and margins more than offset the positives from its plans to rationalise its Perlis refinery to reduce costs and capacity. We downgrade our target price from 88 sen to 58 sen, based on a lower price per net tangible asset of 0.4 times to reflect our concern over its pricing power in the domestic market.
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