Raw sugar price volatility crimps profits. RM189.5m 9M11 core net profit (-8.0% YoY) was below ours and consensus, as it makes up 62% and 68% of full year forecasts. These are disappointing results and underscores that MSM's raw sugar procurement strategies were not as full-proof as we initially thought. Furthermore, the interim DPS of 8sen suggests that the management will commit to the minimum 50% payout ratio. We lowered our earnings forecasts but maintain the stock at a Hold with a lower target price of RM4.10/share based on DDM.

Maybank research (25 November 2011)

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