PETALING JAYA: Cahya Mata Sarawak Bhd
’s losses from its phosphate business will moderate going forward, says Maybank Investment Bank Research (Maybank IB).
The research house trimmed Cahya Mata’s core net profit forecasts for this year and next year by 7% and 8%, respectively, as it deferred the break-even date for the phosphate plant to the third quarter of next year (3Q26) from 4Q25 as per Cahya Mata Sarawak’s guidance.
Maybank IB Research raised the company’s core net profit forecast for 2027 by 10% on higher pre-tax profit margins of 15% from 3% previously.
The research house’s revised core net profit estimates also employ a lower average selling price of US$4,000 per tonne for yellow phosphorus from US$4,100 a tonne previously and average US dollar to ringgit exchange rate of RM4.20 from RM4.45 previously.
Maybank IB said the key markets for the company’s yellow phosphorus are Japan and South Korea.
Once utilisation rates stabilise at about 70%, Cahya Mata expects the phosphate plant to yield pre-tax margins of up to the mid-teens in percentage terms.
Rolling forward its valuation base year to 2026 from this year and ascribing a higher price-earnings ratio of 13 times from 12 times, the research house has raised its target price to RM1.87 from RM1.66 a share. It kept its “buy” call on the stock.
The research house said all four furnaces are being fired up at the plant with commercial operations expected in April next year.
Until then, the plant will not yield much revenue as the yellow phosphorus produced won’t meet market requirements.
The plant is designed to produce around 48 kilotonnes per year of yellow phosphorus and around 60 kilotonnes per year of food grade phosphoric acid, though Cahya Mata will produce only yellow phosphorus first.
Maybank IB Research said the plant needs to produce yellow phosphorus before producing food grade phosphoric acid, as the latter requires the former as a raw material.
It said once all the four furnaces are fully operational to produce yellow phosphorus at desired purity levels, Cahya Mata expects the plant to break even in 3Q26.
This was based on the average selling price for yellow phosphorus of US$4,000 per tonne.
Pricing will vary according to purity levels, said the research house.
Cahya Mata posted a net profit of RM32.12mil in 3Q25 compared with a net loss of RM9.22mil a year earlier, as revenue increased 1.8% to RM305.37mil from RM299.91mil.
In a Bursa Malaysia filing last month on its latest financial performance, Cahya Mata said increased contributions from its cement, road maintenance and property development business units, coupled with stronger joint-venture performance, were the main reasons for the better performance.
For the first nine months of this year, Cahya Mata saw its net profit falling 26.1% to RM46.13mil from RM62.39mil while total revenue dropped 6.6% to RM798.42mil from RM855.27mil earlier.
