Cahya Mata’s phosphate plant to break even in 3Q26

KUCHING (Dec 24): Cahya Mata Sarawak Bhd (Cahya Mata) expects its phosphate plant (PP) to reach breakeven in the third quarter of 2026, once all four furnaces are fully operational and producing yellow phosphorus at the desired purity levels.

Analysts with Maybank Investment Bank Bhd (Maybank IB) said that the breakeven projection is based on an average selling price of US$4,000 per tonne for yellow phosphorus, with Japan and South Korea as the key export markets.

The cement manufacturer anticipates pretax margins of up to mid-teens percentage once utilisation rates stabilise around 70 per cent.

The research house added that electricity was restored to the PP on Sept 9, 2025, and losses in the phosphate segment are expected to moderate as operations ramp up.

The plant is designed to produce up to 48,000 tonnes of yellow phosphorus and 60,000 tonnes of food-grade phosphoric acid per year.

Initially, Cahya Mata will focus on yellow phosphorus, a key raw material for food-grade phosphoric acid production.

“All four furnaces are being fired up, with commercial operations expected to commence in April 2026. Until then, revenue will be limited as early production of yellow phosphorus will not meet commercial specifications,” it said.

Following this timeline, Maybank Investment Bank (Maybank IB) has revised its earnings estimates, trimming FY25E and FY26E core net profit (CNP) by 7 and 8 per cent, respectively, due to the deferred breakeven from 4Q25 to 3Q26.

FY27E CNP, however, has been raised by 10 per cent on expectations of higher pretax margins of 15 per cent, up from 3 per cent previously.

The revised estimates also factor in a slightly lower average yellow phosphorus price of US$4,000 per tonne (from US$4,100) and an adjusted USD/MYR exchange rate of 4.20 (from 4.45).

The house has maintained a “buy” call with a higher target price of RM1.87 on the stock.

To recap, the group’s third quarter of financial year 2025 (3QFY25) showed a strong recovery, with a profit before tax (PBT) of RM48.1 million — up 921 per cent from the previous quarter and 306 per cent from the same quarter last year.

However, the phosphate division remains below commercialisation stage and posted a loss before tax (LBT) of RM23.7 million in 3QFY25.

Losses narrowed 57.8 per cent quarter-on-quarter from RM56.2 million in 2QFY25, mainly due to a weaker US dollar against the ringgit, which reduced unrealised foreign exchange losses, alongside lower fair value losses on investment securities.