MSM FY22 topline sales registered a higher year-on-year basis to RM2.6b (+13%yoy) bolstered by improvement in ASP for all customer segments and Industries as well as Export ASP. Nevertheless, profitability was dragged by <100% in the same period to -RM178.3m affected by higher production cost, mainly due to an increase in input costs comprising NY11, natural gas, packaging materials as well as weaker ringgit translations against USD during the period.
In addition, MSM could not exercise the pass-through mechanism pending due to the government’s decision the increase the gazetted ceiling price. During the quarter, the group revenue grew +14% boosted by an increase in ASP and improvement from wholesale and export segments. Whilst, sales volume across three segments was stable and marginally grew by 2%, in-line with improved consumer demands.
Due to the aforementioned reasons, FY22 normalised earnings dropped to -RM178.3m as opposed profit of RM169.4m in the subsequent year. Overall, normalised earnings came in within expectation at 95% with MIDF maintaining its forecast at this juncture.
The research house anticipates the production cost to remain elevated going into CY23 on higher gas prices as well low UF especially the MSM Johor refinery which is still operating below breakeven point c. 65%. MIDF maintains its NEUTRAL call with 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.
