Tuesday, September 20, 2011

CIMB Research maintains Neutral on MSM Holdings

KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral recommendation on MSM Holdings Bhd as the group's relatively resilient earnings profile is offset by concerns over its ability to pass on rising costs in the coming year.

It said on Tuesday, Sept 20 that furthermore, the share price is well-supported by its 5%-6% dividend yield.

It said MSM's 1H11 results briefing was bittersweet. The pluses were a pick-up in export sales and active exploration of M&As. But domestic sales volume has weakened, operating costs are on the rise and raw sugar costs are uncertain, not helped by the recent softening of the ringgit.

'We make no changes to our earnings numbers or target price of RM5.82, which is based on 13.8 times forward P/E or a 5% discount to our target market P/E,' it said.

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