Pan Borneo Highway Sarawak projects bode well for Cahya Mata Sarawak

KUALA LUMPUR: RHB research has maintained its buy call on Cahya Mata Sarawak Bhd with a target price of RM4.15.

The research house said in a note that CMS is set to benefit from the Pan-Borneo Highway Sarawak projects and the state development budget.

Cement demand is expected to rise higher on the back of the Pan-Borneo Highway Sarawak project – of which progress is still at about 35%. 

"In addition, the commencement of the Sarawak Highway and Second Trunk Road projects as well as the new Baleh Dam project in 2020-2021 also bodes well for the group," said RHB.

It added that CMS is the sole supplier of cement in Sarawak with a total capacity of 2.75 million tonnes per annum, currently running at 60% capacity.

Meanwhile, CMS yesterday announced that the PPES Works-CCCC joint venture had secured a RM466.7mil contract to secure a bridge crossing in Bintulu.

PPES Works has a 70% stake in the JV. It is in turn 51% owned by CMS, giving the latter a 35.7% stake in the contract.

"The bridge, crossing Batang Kemena at Bintulu-Jepak, is approximately 1km long, with four lanes. 

"The double carriageway cable-stayed bridge will come complete with a flyover over the Jalan Tun Ahmad Zaidi-Jalan Tun Razak-Jalan Abang Galau traffic junction, with a connecting road spanning approximately 4km," said RHB.

The contract will be for a period of four years from April 3, 2019 to April 2, 2023. 

"With the contract running four years until April 2023, we increase our FY19-21F earnings by 1%/2%/1%," said RHB.