KUALA LUMPUR (Aug 28): FGV Holdings Bhd is still keen to dispose of part of its 51%-stake in listed sugar refiner MSM Holdings Bhd, but seeks a strategic partner that is adept at logistics, and one that can also help with raw sugar supplies and expansion of export markets.

“It is all about getting the best value. If you look at the sugar market now, it is a very weak, and as shareholders, we want to maximise the returns,” FGV group chief executive officer Datuk Haris Fadzilah Hassan told a press briefing today.

MSM already controls 59% of the local sugar industry, and the company is not interested to partner with a player that is eyeing the same segment.  

“We want partners that can actually strengthen MSM with regards to [the supply of] raw sugar as it is a big component. They must also have logistics capabilities and most importantly, they have [access to other] markets,” Haris said.

Thus far, interested parties in FGV’s subsidiary lack all three criteria, he added, “so we are still working to get the best fit.”

Moreover, after coming onstream this year, MSM’s Johor refinery has increased its refining capacity to 2.2 million metric tons (MT) a year — about a third more than the domestic market demand of 1.5-1.6 million MT.

Haris said the new production capacity provides MSM with an opportunity to explore the export market.   

FGV earnings for the second quarter ended June were hit by MSM’s losses in the sugar business. As such, FGV is reviewing its position in the sugar business as it views the current structure as suboptimal and not adaptable to policy shifts or industry trends.

In the second quarter, MSM was particularly affected by higher finance charges for MSM Sugar Refinery (Johor) Sdn Bhd — the newly commissioned refinery in Tanjung Langsat — as well as lower sales volume and prices.

Haris said while FGV would like to retain its controlling stake in MSM, it would have to consider “if there are opportunities which make sense.”

“As shareholders, we need to look at the things we can do to protect the long-term shareholder value of FGV,” he added.