PETALING JAYA: Shares in Cahya Mata Sarawak Bhd (CMS) extended sharp losses for a second trading day in a row, crashing below the RM2 level for the first time in almost five years, on contract worries.
Some analysts, however, believed that the stock is ripe for the picking.
At yesterday’s close of RM1.92, the stock had halved its value since Pakatan Harapan won the general election on May 9.
RHB Research Institute, in a note yesterday, said that the sell-off on the share price is overdone and will only be temporary.
“This is because we think CMS’ traditional businesses are backed by its expertise and heavy investments in these units. We also believe that the group’s business model remains intact and its income is also well-diversified.
“In addition, we believe CMS’ investments in energy-intensive industries such as OM Material (Sarawak) are expected to reduce its dependency on the Sarawak state government’s economic activities,” it said in a note.
The research firm has reiterated its “buy” call on the cement producer with a target price of RM4.57.
Shares in CMS dropped by nearly 23% or 56 sen yesterday to RM1.92 with 28.93 million shares traded.
The company, which is involved in cement manufacturing, construction materials and property development, among others, was last traded at its lowest level since December 2013.
Sarawak governor Tun Abdul Taib Mahmud and his family collectively own a 33.35% stake in CMS.
StarBiz had reported that CMS expects to see a boost to its bottomline with increasing demand for its construction materials from the ongoing Pan Borneo Highway project.
Newly-appointed group chief executive officer (corporate) Datuk Issac Lugun said the company was anticipating upside for its quarry products and cement-based materials as the Pan Borneo Highway project gathers momentum.
This, he said, would boost the company’s earnings from its traditional core businesses.
CMS’ 51%-owned PPES Works (Sarawak) Sdn Bhd, in partnership with Bina Puri Sdn Bhd, is undertaking one of the 11 work packages of the Pan Borneo Highway project. Construction work for the project, which is worth about RM16bil on the Sarawak side, has progressed to about 20%.
Besides its involvement in the project’s construction, CMS is expected to be the main supplier of the project’s construction materials.
Meanwhile, the proprietary day trading (PDT) and intra-day short selling (IDSS) activities on CMS had been suspended for the second consecutive trading day.
Before the market reopened yesterday, Bursa Malaysia announced that trading under PDT and IDSS for CMS had been suspended for a day and would resume today at 8.30am. Earlier on May 18, the Sarawak-based company’s PDT and IDSS activities were suspended also for the same reason, after it triggered the safeguard mechanism.
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