PETALING JAYA: With its phosphate unit re-energised and the commissioning of a new clinker line, Cahya Mata Sarawak Bhd
is well-positioned to benefit from Sarawak’s next wave of infrastructure expansion, according to CIMB Research.
The research house said, based on Bloomberg estimates, Cahya Mata Sarawak trades at an undemanding 2025 to 2026 price-to-earnings multiple of 8.5 times and 7.7 times – representing a 29% to 41% discount to peers.
This valuation is also at a steep 63% discount to its current book value.
While CIMB Research has a non-rated stance on the stock, it said the group has a strong balance sheet, with a net cash position of RM370mil or 30% of the stock’s market cap.
At the time of writing, the stock traded at RM1.25, up about 8.7% from the day before.
It noted the group is a key supplier of cement materials with an annual grinding capacity of 2.8 million tonnes.
This ensures a stable cement supply across both urban and rural areas in Sarawak.
Its existing clinker capacity of 0.9 million tonnes per year will more than double to 1.9 million tonnes once the second clinker line is commissioned by 2027.
“The RM673mil expansion will enhance production efficiency, lower operating costs and eliminate dependence on imported clinkers,” CIMB Research said.
“The project positions Cahya Mata Sarawak to tap Sarawak’s rising 2024 cement demand of 1.7 million tonnes.”
Last month, Cahya Mata Sarawak announced the restoration of power supply to its 80%-owned Cahya Mata Phosphate Industries (CMPI) plant in Samalaju.
“Despite ongoing arbitration with Sarawak Energy Bhd over the 2019 power purchase agreement, the reconnection allows testing and commissioning to proceed, paving the way for full operational ramp-up by the first half of financial year 2026 (1H26).”
CIMB Research said CMPI recorded RM87mil in pre-tax losses in 1H25 (versus RM40mil in 1H24).
“Based on projected annual revenues of RM800mil to RM1bil and an estimated net margin of about 10%, channel checks suggest CMPI could generate annual net profits of RM80mil to RM100mil once operations stabilise.”
The research house said a new wave of large-scale infrastructure prospects is emerging in the state, led by the new Kuching International Airport and a proposed deep seaport near Tanjung Embang.
The combined investments are about RM100bil. Coming to financials, from financial year 2020 (FY20) to FY24, Cahya Mata Sarawak’s revenue trended positively, registering a four-year compounded annual growth rate (CAGR) of 11.9%.
This growth was primarily driven by higher contributions from the cement division, which achieved a four-year segmental revenue CAGR of 8%, and the acquisition of Oiltools in March 2022, which began contributing from FY22 and accounted for 15.8% of 1H25 revenue.
However, it recorded a four-year pre-tax profit and net profit CAGR of minus 2.8% and minus 9.9%, respectively.
The decline was mainly attributable to continued losses at the phosphate division and lower associate contribution following the divestment of its 25% stake in OM Materials Sarawak in December 2022.
