• MSM Malaysia announced that its group CEO (GCEO) Datuk Khairil Anuar Aziz has been requested to explain certain irregularities relating to inventories of MSM Sugar Refinery (Johor).

• Khairil has been given seven days from yesterday to respond to the matter and has been placed on leave of absence until further notice from the board of directors.

• MSM’s board of directors has appointed Fakhrunniam Othman as the officer-in-charge to perform the functions of the MSM GCEO.

• Fakhrunniam is currently the group investment officer of FGV Holdings Bhd.

• MSM Sugar Refinery (Johor) is currently in the red as there are not enough off-takers. Average utilisation rate of the Johor refinery was 23% in 1HFY20 vs. 19% in 1HFY19.

• Currently, the Johor refinery is operating at utilization rates of 26% to 30% vs. the breakeven rate of 50% to 60%. The Johor refinery has an installed production capacity of one million tonnes per year. This is the same as MSM Prai’s production capacity.

• MSM has had a series of changes in its management team in the past couple of years.

• Khairil was appointed as MSM’s CEO in April 2019.

• In June 2020, Datuk Syed Hisham was appointed as MSM’s chairman.

• Datuk Wira Azhar Abdul Hamid resigned as MSM’s chairman with effect from 31 May 2020 as part of the agreement to resolve FGV’s directors’ fees issue.

• MSM had an acting CEO, Shaffie Said, in January 2018 after Datuk Mohamad Amri left his position as CEO.

• Amri had claimed that he was constructively dismissed. MSM denied his claim and had requested for him to return to work on 22 January 2018.

• Currently, we have a HOLD on MSM with a fair value of RM0.58/share.

Source: AmInvest Research - 9 Sept 2020