MSM Shares Slip as Analysts Downgrade Stock Amid Market Headwinds
Shares of MSM Malaysia Holdings Bhd, a leading sugar refiner, slipped on Tuesday after analysts downgraded the stock to a ‘sell’ rating. This downturn comes after the company reported weaker-than-expected first-half results and faces a cloudy outlook for the future. BIMB Securities Research, one of only two research firms that cover the company, lowered its rating after MSM posted a core net profit of just RM7.1 million for the first half of the year, which ended on June 30, 2025. This figure was well below expectations, representing only 29% of the research firm’s full-year forecast after factoring in a net realisable value adjustment and an onerous provision of RM22 million. In response, BIMB Securities has drastically cut its earnings projections for MSM by 48% for the 2025 fiscal year, 68% for 2026, and a significant 72% for 2027. These revised forecasts reflect the firm’s expectation of weaker average selling prices and thinner profit margins in the coming years, driven by a series of market pressures.
Navigating a Competitive and Uncertain Market
The primary concern for MSM’s near- to medium-term prospects is the uncertainty surrounding the potential dumping of Thai sugar into the market. This risk has increased significantly following China’s recent ban on liquid sugar imports, which could redirect a large supply of Thai sugar into other markets and further pressure average selling prices. This challenge is compounded by the bearish sentiment in the global sugar market, specifically the NY11 price, which is being driven down by an abundant supply from the top three raw sugar-producing countries. Additionally, analysts are concerned about foreign exchange rate fluctuations, which remain a potential risk to the company’s earnings. In a separate note, MBSB Research also downgraded the stock from ‘neutral’ to ‘sell,’ citing a delayed recovery for MSM. The firm now projects that a turnaround won’t happen until next year, pushing its original forecast from fiscal year 2025. The research house also warned that factors like weaker consumer demand, the potential influx of Thai sugar, and a narrowing premium on average selling prices in both the industrial and export segments would continue to negatively impact the company’s earnings.
Price War Concerns and a Reduced Target Price
The competitive landscape is a major factor in the negative outlook for MSM. MBSB Research has adopted a more conservative stance, expressing concern over a potential competitive price war among the players holding approved permits (AP), who may still have substantial inventory to carry forward over the next two years. This intense competition is a key reason why MBSB has set a lower target price of 71 sen for MSM’s stock. At the time of writing, MSM shares, which are the sugar arm of FGV Holdings and one of only two sugar refiners in the country, had slipped 1.5% to 98 sen. The company has seen a significant decline in its share price year-to-date, with the counter falling over 19%. This poor performance highlights the market’s reaction to the company’s disappointing results and the analysts’ cautious projections. With a challenging market environment, including the risk of a sugar influx from Thailand and an ongoing price war, analysts are now painting a grim picture for the company’s short- to medium-term recovery, prompting the sharp downgrades and a more conservative outlook from investors.
