Companies: Cahya Mata Sarawak ************************ Cahya Mata Sarawak Bhd’s (CMS) newly-upgraded clinker plant is set to propel the group’s near-term earnings while its other business units will benefit from the developments in Sarawak Corridor of Renewable Energy (SCORE). According to RHB Research Institute Sdn Bhd (RHB Research), with the clinker plant back in operation at an average utilisation rate of more than 80 per cent in the second quarter of financial year 2013 (2QFY13), CMS’ clinker unit bounced back into the black during the period. The turnaround will be the group’s key earnings driver in the short term as the unit’s prolonged shutdown in 2012 had led to a segmental pre-tax loss of RM29 million. Apart from the revival of its clinker unit, CMS is selling two plots of land to Sentoria Group Bhd. “We expect the sale of at least one plot to be concluded in FY13 as it would have fulfilled all the stipulated terms by year-end. The land sale will bring in about RM47 million versus our RM20 million annual projection for the next two years. “Moving forward, the SCORE is well on track to propel the state’s economy, thereby directly or indirectly boosting the growth of all the conglomerate’s business units,” RHB Research projected. Overall, the research house found that the stock’s valuation remained undemanding, especially after the recent market-wide selldown. “CMS’ current market cap is less than the valuation of its cement division based on its peers’ average price earnings (P/E). Note that it’s other divisions account for half of the group’s earnings,” it added in a research note. As such, RHB Research reiterated its ‘buy’ recommendation on the stock, with its sum of parts-based fair value of RM7.55 per share reflecting 1.2-fold price-to-book value and a 10.3-fold P/E on FY14 forecast estimates, after stripping off net cash.
Posted on: Tue, 03 Sep 2013 00:34:53 +0000
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