Stronger cement demand to drive Cahya Mata’s earnings

KUCHING (Aug 28): Cahya Mata Sarawak Bhd (Cahya Mata) stands to be one of the main beneficiaries of a stronger construction job flows which is expected to improve in the second half of 2024 (2HY24).

MIDF Amanah Investment Bank Bhd’s research team (MIDF Research) highlighted this in a recent report and opined: “The group is the only cement producer in Sarawak currently and its production capacity is sufficient to meet the entire state’s demand.”

On the other hand, the research team at Maybank Investment Bank Bhd (Maybank IB Research) noted that Cahya Mata’s cement volume sale was flattish q-o-q in 2Q24, it estimated, still affected by the prolonged rainy season in Sarawak which had impacted/slowed down construction activities there.

“Nonetheless, management expects cement demand to pick up in 2H driven by infrastructure projects. At the same time, the group will continue to pursue operational, logistics and distribution efficiencies to sustain margins,” it added.

On the group’s recently released 1H24 results, Maybank IB Research said Cahya Mata’s net profit exceeded consensus’ expectations.

It also noted that its 1H was mainly driven by the cement ops (improved margins), higher Oiltools contribution, and lower losses at the phosphate ops.

It further pointed out that Cahya Mata’s balance sheet remains strong with a net cash of RM226 million.

Meanwhile, Cahya Mata said: “Looking ahead, Cahya Mata is committed to maintaining our resilience and agility in a dynamic market landscape.

“We will strategically focus on fully realising our growth potential by leveraging our robust balance sheet and diverse portfolio of businesses that span various sectors.

“Our dedication to operational excellence and ongoing cost optimisation initiatives will not only enhance our efficiency but also position us as a competitive leader in the industry.”

It added, “Furthermore, we aim to capitalise on emerging opportunities that align with our strategic goals, fostering innovation and sustainability in our operations.

“By prioritising stakeholder engagement and delivering consistent value, we seek to strengthen our market presence and drive long-term profitability for our shareholders, while contributing positively to the communities we serve.”