KUALA LUMPUR, Nov 22 (Bernama) -- Sugar producer MSM Malaysia Holdings Bhd is forecast to book flat-to-narrower sequential core net loss for the fourth quarter (Q4) of 2022 on better export premiums and stronger local demand, according to CGS-CIMB.
The stockbroking firm said MSM’s core net losses could narrow this quarter as potentially higher export premiums and stronger wholesale demand ahead of end-year festivities are likely to offset increased raw sugar and refining costs.
“Nevertheless, we retain our core earnings per share forecasts and 0.4 times price to net tangible assets-based TP of 58 sen (per share) pending the results briefing later,” it said in a note today.
CGS-CIMB said MSM posted a core net loss of RM90 million in the third quarter of this year, the fifth consecutive quarter of core net losses and the highest quarterly core net loss recorded since it was listed.
This brought the core net losses for the first nine months to RM156 million against a net profit of RM28 million in the corresponding period last year, it said.
“This was larger than our full-year estimate of a RM124 million loss and Bloomberg consensus full-year expectation of a RM89.6 million net loss. The stark deviation was mainly the result of higher-than-expected refining costs as well as input costs,” CGS-CIMB said.
MSM’s sales revenue for Q3 and the first nine months of 2022 surged 23 per cent and 17 per cent year-on-year (y-o-y) mainly owing to higher average selling prices as well as higher sales volumes.
“Nevertheless, this was insufficient to offset the higher refining costs incurred, led by elevated production costs which rose by 30 per cent y-o-y in Q3 2022.
“We gather that the group was hit by ballooning refining costs, particularly for natural gas comprising 40 per cent of its refining costs, which rose 55 per cent y-o-y in Q3 2022, as well as higher Sugar No 11 contract (NY11) raw sugar costs and the weakening of the ringgit against US dollar,” it said.
CGS-CIMB reiterated its “reduce” call on MSM, saying its earnings prospects remain bleak as the group continues to suffer from suboptimal utilisation rates and high refining costs.
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