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Singapore Investment



It was a sweet day for MSM Malaysia Holdings Bhd as it is finally allowed to sell ‘fine sugar’.

Domestic Trade and Cost of Living Minister said MSM and Central Sugar Refinery Sdn Bhd (CSR) will be able to produce the new type of sugar at market price effective May 25.

This is good news for the 2 sugar refiners as fine sugar, which is considered a premium item, fetches better margins due to higher selling prices.

The counter rose 26.5% to close at RM1.05 on May 25, inching closer to its 52-week high of RM1.10.

A commendable performance for MSM after hitting a 52-week low of 73 sen.

The move by the government to allow the 2 sugar refiners is lauded as sales from this additional product may just be the answer to turn their fortunes around, at least for MSM.

MSM plunged into the red, recording a net loss of RM178.7 million for the financial year ended Dec 31, 2022 versus a net profit of RM125.3 million a year earlier.

This is despite a 13.5% rise in revenue to RM2.6 billion from RM2.3 billion previously.

MSM attributed the drop in bottom line to prolonged margin compression of its domestic controlled price retail segment and lack of subsidy.

The recent move to allow the manufacturing and sell fine sugar will probably help MSM return to the black.

However, the 2 sugar refiners must continue producing sufficient coarse and refined white sugar and to sell them at the set retail ceiling price of RM2.85/kg (coarse) and RM2.95/kg (refined).

The condition the government has imposed on sugar refiners to sell fine white sugar is that there must be coarse and refined white sugar supply of 42,000 tonnes a month.

The government said there are no changes to the existing sugar ceiling prices.

Previously, sugar refiners were not allowed to sell fine white sugar as the introduction of any new sugar product in the market must first be approved by the ministry as sugar is a controlled item.

In comparison with regional peers, Malaysia’s retail sugar prices are the cheapest in the region, with the Philippines limiting its sugar price at RM8.50/kg.

Meanwhile,Singapore and Vietnam sell sugar at above RM6/kg, Indonesia (RM4.40/kg), and Thailand (RM3.20 to RM3.50/kg), according to MSM.

MSM and CSR had previously urged the government to review the sugar retail price — in the form of a price hike or floating price — to safeguard the sustainability of the local sugar industry.

However, the retail price remains unchanged, and the industry has not received any government subsidy for a decade.

The latest move by the government to allow our sugar refiners to sell fine sugar is lauded but they are not allowed to increase the existing sugar ceiling price.

Investors are excited with the prospects of turning around with the recent fine sugar move.

But the refiners would have to wait before seeing if sales of the fine sugar will indeed propel it forward.


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