MBSB Research said the key headwind MSM faces remains the oversupply of Thai sugar.
PETALING JAYA: MSM Malaysia Holdings Bhd
is set to face a prolonged recovery path, as analysts warn that the persistent glut of Thai sugar in the region will weigh on prices and margins well into the medium term.
Despite narrowing its second quarter net loss, the sugar refiner’s near-term outlook remains clouded by depressed average selling prices (ASPs), competitive pressure, and weak domestic demand.
According to MBSB Research, the key headwind MSM faces remains the oversupply of Thai sugar, estimated at approximately one million tonnes that has been flooding regional markets.
It noted that the ban on Thai sugar exports to China had redirected supplies into South-East Asia, eroding premiums once captured in industrial and export subsegments.
“As a result, ASPs have compressed across the board, materially impacting margins,” it added.
MBSB Research downgraded MSM to a “sell” from “neutral”, slashing its target price to 71 sen from RM1.20.
“We believe our valuation is justified, as MSM’s recovery is expected to start by next year instead of 2025, as demand weakens, dragged by the influx of Thai sugar, compounded by narrowing ASP premium in industry or export subsegment,” it explained.
MSM reported a narrowed net loss of RM29.7mil for its second quarter ended June 30, 2025, from RM32.4mil a year earlier, as lower ASPs offset higher sales volumes. Revenue slipped to RM812.7mil from RM833.1mil.
For the first half of financial year 2025, the company swung into a net loss of RM26mil compared with a net profit of RM9.3mil a year earlier.
BIMB Research echoed a cautious stance, citing both external and operational challenges.
“In the long term, we expect MSM to stage a turnaround, supported by the resolution of boiler-related operational issues, steady demand across all segments and easing sugar futures prices,” it said.
However, it said: “In the near-to-medium term, we remain cautious on MSM’s prospects given the uncertainty surrounding Thai sugar dumping following China’s ban on liquid sugar imports, which could further pressure ASPs.”
BIMB Research has also downgraded the counter to a “sell” from “hold”, trimming its target price to 80 sen from RM1.10. This was in tandem with it lowering its earnings forecasts for MSM for 2025 to 2027 between 48% and 72% to reflect the anticipated decline in ASP and lower margins.
Both MBSB Research and BIMB Research cautioned that abundant supply, currency risks and sluggish local demand could delay MSM’s long-awaited turnaround beyond 2025.
