MSM IPO Priced at RM3.38 or 10.2x PE

So we know it now the IPO price is RM3.38 or 97% of the "Institutional Price".

MSM is the leading sugar producer in Malaysia. Its products range from white refined sugar and soft brown sugar. The Company owns brands such as "Gula Prai" and "Gula Perlis".

My view:
1. Lack of growth story as Malaysia market is generally matured. Sugar intake will be correlated to population growth. I think 5% to 8% revenue growth is the range where the top line will grow.
2. Cost of production will swing according to global sugar price. But current downtrend in sugar price will benefit MSM. Net profit margin = 10.6% in 2008, 14.4% in 2009, 10.7% in 2010. Something like 11% net profit margin should be the case in 2011.
3. Dividend policy of at least 50% of net profit. This will translate to about 17 sen dividend or 5.0% dividend yield.
4. Conclusion: more to dividend play than growth story. Characteristic wise, it will be something like MAXIS (share price stable but give consistent dividend).