Why MSM keeps rising despite on-going losses?

MSM has recorded the eighth consecutive loss-making quarters. Despite the weak earnings, share price has risen from RM0.75 in Mar 2023 to RM1.38 on 24th Nov 2032, a 84% rise.

Why is that so? It is due to the speculation of the market that the gov will soon subsidies sugar in Msia as the input cost (raw sugar) has risen to an unsustainable level.

During an analyst briefing with the management during the lastest qr (3Q23), the management has guided that the gov has given a special incentive to MSM for Nov and Dec 23 - RM1,000/MT for both 1kg/2kg coarse grain sugar and 1kg fine granulated sugar.

With the introduction of premium sugar in 25th May 23 (which drove a 13% increase in wholesale segment) and the incentive from the gov, MSM will turnaround in 4Q23. I estimated that net margin can reach 6% and assuming all other expenses remained, this implies a fair price of RM2.8, on a PE of 10x.