Feb 26, 2021
All indicators turning favourable for 1H21
MSM’s final core net profit of RM6m was above our expectation due to better refining profit and stronger export volumes.
The sustainability of 4Q earnings is likely dependent on the white sugar premium trend, raw sugar prices and competition in the domestic market.
We upgrade to Add from Hold with a higher TP of RM1.22 (based on P/NTA of 0.9x). A key re-rating catalyst is better-than-expected earnings.
Upgrade to Add with a higher TP of RM1.22 (P/NTA of 0.9x)
We significantly raise our FY21-22F earnings forecasts to reflect higher refining margins.
In line with the expectation that the business will return to profitability, we raise our TP for MSM to RM1.22 based on 0.9x P/NTA from 0.4x P/NTA.
We upgrade the stock to Add and advise investors to trade on expectations of positive earnings momentum in 1H21.
Key risks are weaker-than-expected earnings and higher raw sugar costs.
Source: CIMB
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