KUALA LUMPUR: RAM Rating Services Bhd (RAM Ratings) has revised the long-term ratings outlook on Cahya Mata Sarawak Bhd
to positive from stable in view of the group’s improving business and financial profiles.
In a statement today, RAM Ratings said the company’s new phosphates manufacturing division, Cahya Mata Phosphates Industries Sdn Bhd, has started commissioning production and would transition to commercial operations by mid-2023.
"The division is anticipated to become a significant earnings contributor from fiscal 2024 and will diversify the group’s current construction-focused business profile and further strengthen its financial profile with segmental contribution potentially reaching half of the group’s earnings,” it said.
Meanwhile, the credit rating agency said it expect the group to be a direct beneficiary of the rise in Sarawak’s construction activity and its sturdy foothold in Sarawak’s cement industry would directly benefit from the state’s continued focus on infrastructure development.
However, it said a lack of geographical diversification and the group’s cyclical core businesses are ratings moderators but the rising prominence of Cahya Mata Phosphates’ earnings will reduce the exposure to these factors.
According to RAM Ratings, the ratings may be upgraded if Cahya Mata Phosphates could demonstrate stable operational and financial performances.
"Any significant deviation from Cahya Mata’s plans and realisation of expected earnings of the phosphates operation may warrant a reversion of the outlook to stable,” it said.
It added that the group also anticipated modest contributions from its recently acquired businesses in drilling fluids and drilling waste management to become more meaningful over the longer term. - Bernama
