Cahya Mata Sarawak snaps five-day losing streak after above-view 4Q

cahya mata sarawak snaps five-day losing streak after above-view 4q

Cahya Mata Sarawak snaps five-day losing streak after above-view 4Q

KUALA LUMPUR (Feb 27): Shares in Cahya Mata Sarawak Bhd (CMS) snapped a five-day losing streak, and climbed nearly 5% on Tuesday, after the material-and-construction company reported stronger-than-expected quarterly results.

The counter rose to as high as RM1.02. At 9.30am, the stock was trading at RM1 per share, valuing the company at RM1.07 billion, after 2.7 million shares changed hands. In contrast, the benchmark FBM KLCI index was 0.2% higher.

Analysts are banking on stronger construction job flows from development and infrastructure spending to boost CMS’ fortune, as the company is the sole cement producer in Sarawak.

“We believe demand for building materials in Sarawak should remain intact, especially for cement, as supported by local infrastructure projects, namely the Kuching Urban Transportation System, Sarawak-Sabah Link Road, and Baleh Dam,” TA Securities said.

Shares in CMS have declined 7.4% so far this year, bucking strong gains of rivals in the cement business as well as in the construction industry, amid concerns over a long-running dispute between CMS’ phosphate unit and utility company Syarikat Sesco Bhd.

Still, a majority of three out of four analysts covering CMS have ‘buy’ calls on the stock, while one has a ‘hold’ rating. The median 12-month target price is RM1.21, according to Bloomberg, a potential upside of 21% from the current price.

“We remain cautious about the phosphate operations, which will remain an earnings drag so long as electricity supply is not restored,” said Maybank Investment Bank.

Sesco has filed a counterclaim of RM342 million, which CMS has booked as a contingent liability in its financial statements. The evidentiary hearing has been fixed for Aug 26 to 30 before the arbitral tribunal.

CMS reported on Monday a 71% year-on-year rise in net profit to RM36.25 million for the fourth quarter ended Dec 31, 2023 (4QFY2023), as its cement segment returned to profitability. Revenue for the quarter rose 7.86% to RM332.65 million.

For FY2023, net profit more than halved to RM115.13 million, mainly as the group recognised a one-off gain of RM197.78 million in FY2022. Full-year revenue, meanwhile, rose 18.82% to RM1.2 billion, on the back of higher contributions from the cement and oiltools divisions.

Cahya Mata Sarawak 4Q net profit up 71% as cement business returns to profitability

Sesco hits Cahya Mata Sarawak with RM342m counterclaim in power supply dispute

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