• MSM Malaysia has rescinded the sale of its 4,454ha of land in Chuping, Perlis to F&N Holdings. The land is planted with oil palm, rubber and mangoes.

• The proposed sale was contingent on several conditions. The first condition was approval from the Ministry of Economic Affairs, which F&N did not secure within the stipulated timeline of six months.

• As F&N did not secure the approval, MSM has decided to rescind the sale of the land. MSM will return the earnest deposit of about RM15.6mil to F&N.

• We are marginally negative on this development. The Chuping land recorded a net loss of RM11.3mil in FY19 due to higher taxes and closure costs.

• As the proposed sale has been rescinded, we are unsure if MSM would have to restart operations at Chuping.

• It also appears that MSM would not be able to monetise its non-core assets.

• MSM was supposed to sell the Chuping land to F&N for RM156mil cash. The proceeds were supposed to be used for working capital and repayment of borrowings.

• MSM’s gross borrowings stood at RM1,044.8mil as at end-Dec 2019. Net gearing was 52.7%.

• The loss on disposal was supposed to be RM1.76mil.

• We maintain HOLD on MSM Malaysia with a fair value of RM0.85/share. We would be reviewing our fair value on MSM.

Source: AmInvest Research - 10 Apr 2020