PETALING JAYA: The recent resumption of electricity supply to Cahya Mata Sarawak Bhd
’s phosphate plant in Samalaju Industrial Park in Bintulu was well within expectations and prior management guidance, says MBSB Research.
Electricity to the phosphate plant had previously been disconnected in 2023 due to a dispute under the power purchase agreement signed with Syarikat Sesco Bhd.
The research house said the reconnection by state utility firm Sesco to Cahya Mata Phosphates Industries Sdn Bhd (CMPI) removes a key operational issue and ensures that commissioning progress can continue uninterrupted.
As such, commercialisation is still on track for the fourth quarter of this year and all four furnaces are expected to be fully operational by end of first or second quarter of next year .
“We continue to view the phosphate division as a major medium-term earnings driver once product sales commence, with exports targeted to Japan, South Korea and Russia,” MBSB Research noted.
In the interim, group earnings will remain supported by Sarawak’s robust infrastructure rollout, which underpins steady demand for cement where Cahya Mata Sarawak retains a dominant market position.
Looking ahead, the research house also remained optimistic on Cahya Mata Sarawak’s execution milestones into next year, with upside anchored by the phosphate division’s eventual commercialisation and expansion at the Mambong cement plant in Kuching, slated for completion in 2027, which will enhance capacity and cost efficiency.
This will entrench the group’s position as the sole cement supplier in Sarawak, making it a prime beneficiary of future industrial development in the state.
According to MBSB Research, Cahya Mata Sarawak’s management maintains that commercialisation of its phosphate operations remains on track for the fourth quarter of this year.
For 2Q25, the phosphate division reported a significantly wider loss before tax of RM56.2mil, more than double the RM21.2m recorded in the same quarter last year.
The deterioration was largely attributable to currency movements, as the strengthening of the ringgit against the US dollar from 4.45 to 4.10 gave rise to substantial unrealised foreign exchange losses that were compounded by fair-value adjustments in investment securities.
While the reconnection itself is immaterial to this year’s financials, MBSB Research said this de-risks the commissioning path and is the key enabler for the plant’s production.
“On resolution of the arbitration and commencement of sales, the phosphate division is expected to contribute positively from next year onwards, with management’s long-term gross profit guidance of about RM150mil, which is broadly consistent with pre-Covid 19 run-rates,” the research house said.
With the power restored and earnings catalyst ahead, the research house has reiterated a “buy” call on the stock with an unchanged target price of RM1.49 per share.
