Cahya Mata Sarawak Bhd

[winston]

Lukewarm Sentiment Due To Ongoing Corporate Governance Affairs

The prolonged pandemic outbreak coupled with the ongoing corporate governance
issues continue to hamper the company’s outlook, at least in the near term.

Although we still like its long-term prospects as the prime beneficiary of the upcoming state election and economic reopening, we believe investors are likely to stay on the
sidelines for the time being pending results of the ongoing investigation.

As such, we downgrade to HOLD with a lower target price of RM1.40.

Source: UOBKH

https://research.uobkayhian.com/content ... 97f60f1b06

[winston]

not vested

2Q21: Positively surprised
Tactical U/G to BUY

CMS’ results positively surprised with 1H21 core net profit at 66% of our FY21E as associates contribution beat estimates, offsetting shortfalls from its traditional core businesses.

We made just small revisions to our earnings estimates, anticipating a weaker 2H21.

Our RNAV/shr estimate is lowered to MYR2.12 (from MYR2.50) on updating for latest financials from its FY20 Annual Report and audited accounts of its key subsidiaries/
assocs/JVs.

Our revised TP is MYR1.48 on unchanged 0.7x RNAV peg. We tactically upgrade the stock to BUY.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/232982.pdf

[winston]

not vested

ESG: Continuity in efforts,
restoring confidence are key
Take profit; D/G to HOLD

As a major construction-based conglomerate with diversified businesses, CMS’ sustainability and governance responsibilities are heavy, and its ESG risks inevitably higher than that of its peers.

While CMS has achieved milestones in some material ESG matters, continuing on its efforts is key.

Restoring confidence in governance is also key after recent developments relating to its former Group CFO and changes in leadership.

On limited upside to our unchanged TP (0.7x RNAV), we D/G the stock to HOLD.

Our BUYs in the construction-cum-infrastructure sector are Gamuda and IJM.

TP: RM 1.48

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/238958.pdf

[winston]

not vested

3Q21: Positive surprise again
Decent upside; tactical U/G to BUY

CMS’ results were above expectations (for the 3rd consecutive quarter) with 9M21 core net profit at 99%/86% of our/consensus FY21E; the beat coming from its cement and associates.

We raise FY21-FY23E core net profit by 25%-26% p.a. and RNAV/shr est. to MYR2.39 (from MYR2.12).

Our revised TP is MYR1.68 (+20sen) on unchanged 0.7x RNAV peg.

With decent upside to our new TP, we tactically upgrade the stock to a BUY.

Positively too, measures are being put in place to strengthen its risk
management framework following findings by KPMG.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/243083.pdf

[winston]

Cahya Mata unit raises cement prices amid rising production cost

by Shazni Ong

CMS Cement Industries Sdn Bhd, will raise its price of cement by an average of 10% subject to product types and location.

Due to significant and sustained rising cost of raw and packaging materials and freight charges.

Cement production cost has increased by an average of 9% over the past year.

Baltic Dry Index rising 64% in 2021.

The sack kraft paper index, meanwhile, has risen by 33% during the same period, which in turn has increased packaging costs.

The average unit price of cement in Sarawak remains competitive compared with other regions in Malaysia, especially now, as prices of cement in both Sabah and Peninsular Malaysia have been increasing over the last several months.

Source: theedgemarkets.com

https://www.theedgemarkets.com/article/ ... ction-cost

[winston]

not vested

Deep in value; maintain tactical BUY

4Q21 headline net profit included MYR45m negative one-offs.

Net of this, core net profit positively surprised on strong assoc contribution which
more than offset weak Cement earnings.

Our FY22/23E net profit are trimmed by 2%/3% after realigning our assumptions.

Our RNAV est. is however raised to incorporate a strengthened balance sheet end-FY21.

Based on unchanged 0.7x RNAV peg, our new TP is MYR1.84 (+10%).

The stock remains deep in value - at 6.7x FY22E PER, 0.4x P/B, 0.46x e.RNAV.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/253428.pdf

[winston]

not vested

Cement shortage will benefit CMSB

by Koon Yew Yin

On 15 June 2022, Cahya Mata Sarawak sold Entire Stakes in Sarawak Alloy Smelter and OM Samalaju to OM Holdings for RM526.52 Million.

CMSB is cash rich. The last traded price is Rm 1.24 and Rm 3.08 Net tangible asset.

Latest Net profit Rm 154.4 million and EPS 14.37 sen. In the previous quarter, Net profit Rm 39.6 million and EPS 3.69 sen. Profit shot up 400%.

CMSB price Rm 1.24, latest quarter EPS 14.37 sen and previous quarter EPS 3.69 sen

https://klse.i3investor.com/blogs/koonyewyinblog/

[winston]

not vested

Disposal gains boosts Cahya Mata's 4Q earnings

by Justin Lim

Cahya Mata Sarawak Bhd (CMS)’s net profit for the fourth quarter ended Dec 31, 2022 (4QFY2022) rose 27.6% to RM32.11 million or earnings per share (EPS) of 2.99 sen from RM25.15 million a year ago or EPS of 2.34 sen.

The stronger earnings performance was lifted by recognition of gain on disposal of associates of RM89.02 million, as well as higher revenue incurred for the quarter.

Quarterly revenue grew by 26.9% to RM306.8 million in 4QFY2022, from RM241.62 million a year before, mainly driven by higher revenue contributions from the cement and road maintenance divisions, and new contribution from the oil tools division.

Annual revenue also increased 23.8% to RM1.01 billion from RM814.55 million previously.

CMS returned to a net cash position of RM427.55 million for FY2022 from a net debt position of RM352.83 million for FY2021.

Source: theedgemarkets.com

https://www.theedgemarkets.com/node/657007

[winston]

not vested

4Q22: Shortfall
Maintain tactical BUY

4Q/12M22 headline net profit included sizeable one-off gains. Excluding this, 4Q fell into a loss, bringing 12M core net profit to MYR100m (-39%YoY), at just 48%/44% of our/consensus FY22E.

The shortfall came from the cement op (loss-making in 4Q) and a high effective tax rate of 62% in
4Q.

We maintain our FY23-24E earnings pending an update with management. Our TP is unchanged at MYR1.57

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/306026.pdf

[winston]

not vested

Cahya Mata upbeat about securing more jobs in Sarawak

In the fourth quarter ended Dec 31, 2022, the company’s net profit increased by 28% year-on-year (y-o-y) to RM32.11mil, while revenue for the quarter rose 27% y-o-y to RM306.8mil.

“Revenue improved mainly due to the cement division and new contribution from the oiltools division.

“Meanwhile, a significant improvement in pre-tax profit and net profit was mainly attributable to the recognition of gain on disposal of associates of RM89.02mil,” it said.

Revenue of RM1.01bil for FY22, which is an increase of 24% from the preceding year.

The higher revenue for the year was due to improved contributions from its cement and road maintenance divisions.

Net profit for FY22 increased by 46% to RM298.06mil from RM204.22mil in FY21.

Source: The Star

https://www.thestar.com.my/business/bus ... in-sarawak