MSM Malaysia Holdings FY22/FY23 Earnings Estimates Cut

MSM’s 2QFY22 topline improved year-on-year to RM624.2m (+14%yoy) derived from higher in ASP for all customer segments and Industry as well as Export ASP

MSM Malaysia Holdings FY22/FY23 Earnings Estimates Cut

With improved sales were offset by high production cost, analysts have chopped the earnings forecast for MSM Malaysia Holdings for FY22/FY23.

"Earnings came in below our and consensus forecast as it dropped to -RM60.2m in 1HFY22 as opposed to RM44.7m in prior year.

"Thus, we cut our FY22/FY23 earnings estimates by -192%/-81%, as we reckon the production cost to remain elevated due to higher gas price as well UF especially the MSM Johor refinery which is still operating below breakeven point c. 50%," says MIDF.

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Recommendation

"We rollover our valuation year and downgrade our call to Neutral (from Buy) with revised TP of RM0.83 by pegging its FY23 EPS of 3.8sen to PER of 22x which is within the range of 17-25x for the consumer segment," says the analyst firm.

MSM’s 2QFY22 topline improved year-on-year to RM624.2m (+14%yoy) derived from higher in ASP for all customer segments and Industry as well as Export ASP.

However, it recorded loss of -RM34.7m due to higher production cost, dragged by higher refining cost attributed to lower utilization rate factor (UF) and gas costs as well as weaker ringgit translations against USD. In addition, MSM could not exercise pass- through mechanism since government gazetted the selling price.

Wholesale segment leading the way

During the quarter, the group’s revenue registered +13% growth boosted by increase in ASP and improvement from wholesale (+45%yoy), industry (+40%yoy) and export (+19%yoy) segments. Whilst, sales volume across three segments were stable and marginally grew by 3%.