KUALA LUMPUR: MSM Malaysia Holdings Bhd's (MSM) nine months of financial year 2022 (9M22) core net loss of RM177 million comes in below expectations, said Affin Hwang Capital Bhd.
Affin Hwang said MSM reported a 9M22 core net loss of RM176.5 million after excluding exceptional items, which fell below its and consensus estimates due to higher-than-expected input costs and operating costs such as refining and freight costs.
Even then, the firm said MSM's revenue increased to RM1.9 billion on the back of higher sales contributions from wholesale , industries and exports segments.
"Profitability was dragged by very high primary input costs such as raw sugar, freight, natural gas, packaging materials, inland logistics and minimum wages.
"This is also further exacerbated by a weakened ringgit to US dollar," it said.
Moving forward, Affin Hwang is cautious of rising energy prices affecting refinery costs and weakening of the ringgit to the US dollar affecting import costs which may be partially supported by a correction in raw sugar price.
The firm said declining consumption growth might hamper sales volume and average selling price.
"We terminated our coverage on MSM due to our resource re-allocation amid a challenging outlook for the stock.
"Our last call on the stock was a Hold call with a target price of 85 sen," it added.