MSM’s share price climb puts Felda’s offer price for FGV in spotlight
TheEdge Tue, Mar 02, 2021 03:16pm - 24 minutes ago


KUALA LUMPUR (March 2): MSM Malaysia Holdings Bhd’s share price continues to be on an upward trend after the sugar refiner announced its quarterly financial results that showed a net profit of RM56.24 million in the fourth quarter ended Dec 31, 2020 (4QFY20).

As at the lunch break, MSM closed at RM1.34, up six sen or 4.7%, with 59.3 million shares traded. The stock hit an intra-day high of RM1.49.

At this share price, the country’s largest sugar refiner is currently valued at RM977.14 million.

The stock is currently trading at more than a year’s high, after its share price more than doubled from 56 sen last week following the posting of its financial results on Thursday.

MSM’s share price has exceeded a few analysts’ target prices at below RM1.30. The highest target price is at RM1.96 pegged by MIDF Amanah Investment Bank. The average target price of four analysts is RM1.41.

Interestingly, MSM’s share price is trading at a price higher than its parent company FGV Holdings Bhd, whose share price is currently trading at RM1.31.

The strong rebound on MSM has also cast the spotlight on the valuation of FGV shares considering that the plantation giant is in the midst of being taken private by its controlling shareholder Federal Land Development Authority (Felda).

With MSM’s share price having more than doubled recently, this means that FGV’s 51% controlling stake in the sugar company is now worth a lot more compared with the day when Felda launched its takeover offer in early December last year.

A back of the envelope calculation shows that FGV’s 51% stake in MSM is currently worth RM480.4 million at the closing price at noon break today, translating into 16.9 sen per share compared with barely 3.7 sen as at end-2020.

To recap, Felda made a mandatory takeover offer to FGV on Dec 8 last year, offering to acquire all remaining shares in the plantation group (excluding treasury shares) at RM1.30 per share.

The offer has been extended more than once. It will be closed on March 15 from the original deadline of Feb 2. As at Feb 25, Felda has raised its equity interest in FGV to 2.78 billion shares or a 76.32% stake.

MSM posted net profit of RM56.24 million for 4QFY20, compared to net loss of RM40.28 million a year ago, due to higher overall margin and lower finance cost.

For the financial year ended Dec 31, 2020 (FY20), its net loss narrowed to RM71.23 million from RM299.77 million a year earlier.

On its prospects, MSM said the outlook for FY21 remains challenging with economic disruption in the country from travel and movement restriction orders due to the Covid-19 pandemic.

However, with the implementation of the vaccination program, MSM said it anticipates national sugar consumption to gradually improve.