Analysts still bullish on Cahya Mata’s FY26 recovery

KUCHING (Feb 25): Cahya Mata Sarawak Bhd’s (Cahya Mata) weaker-than-expected financial year 2025 (FY25) earnings have prompted earnings cuts by analysts, but the miss is seen as a temporary setback as analysts remain bullish on a FY26 to FY27 recovery, citing cement strength and eventual turnaround of its phosphate operations as catalysts.

In a company report, the research arm of Maybank Investment Bank Bhd (Maybank Research) noted that Cahya Mata’s FY25 core net profit (CNP) had fallen 27 per cent year on year (y-o-y) to RM103.4 million, which accounted for only 75 per cent of their full-year forecast.

In a separate report, MBSB Investment Bank Bhd (MBSB Research) echoed that the FY25 results had disappointed as it made up only 76.7 per cent and 78.3 per cent of theirs and consensus full-year expectations.

The two analysts guided that the negative variance was largely due to pre-commissioning costs related to the phosphate plant and weaker-than-expected road maintenance earnings.

The drag was most apparent in 4Q25 where Cahya Mata’s EBIT margin plummeted from 22.9 per cent in 4QFY24 to just 5.8 per cent, due to the aforementioned pre-commissioning expenses and overall softer contributions from several divisions.

Despite the disappointing quarter, analysts remained optimistic of the cement maker registering a rebound in FY26-FY27 as they cited that the recent weakness is likely cyclical and transitional rather than structural.

Both Maybank Research and MBSB Research guided that its cement division which saw a 7 per cent y-o-y grow in earnings on higher sales volume and prices would be the group’s key earnings pillar in FY26 given the group’s position as Sarawak’s sole cement producer and largest construction materials supplier.

With major infrastructure and construction projects expected to roll out in the state, MBSB Research believed Cahya Mata is well-positioned to benefit from the stronger job flows.

Maybank Research was also hopeful that its phosphate division losses would narrow and achieve break even by 3QFY26 and turn profitable thereafter.

“We still expect Cahya Mata CNP to grow by 33 per cent compound annual growth rate (CAGR) from FY25 to FY27 due to the phosphate plant ramping up,” the research arm opined.

Meanwhile, MBSB Research has taken a more measured view and expects earnings prospects to improve in FY27, with the expected of the Clinker 2 Line in Mambong by mid-2027.

To account for the missed expectations, Maybank Research cut its FY26 and FY27 earnings estimates for Cahya Mata by 8 per cent to RM143 million and RM193 million, while introducing FY28 earnings of RM199 million.

Similarly, MBSB Research slashed its FY26 and FY27 profit before tax (PBT) estimates by 8.1 per cent and 6.3 per cent to RM183.3 million and RM219.9 million, respectively.