Cahya Mata Sarawak Bhd (CMSB) skidded to a two-month low after the conglomerate fell into the red with a net loss of RM11.32 million in the second quarter ended June 30 (Q2 FY2025).
The stock fell nearly 7% or 8 sen to RM1.10 in early morning trading. It clawed back its losses to close at RM1.14, 3.4% or 4 sen lower, valuing the group at RM1.23 billion. A total of 10.3 million shares were traded.
In its bourse filing yesterday, CMSB attributed the Q2 loss, on the back of net profit of RM33.37 million a year ago, to an unrealised forex loss of RM30.67 million on financing activities.
Second quarter revenue fell 11.2% to RM246.92 million from RM277.99 million a year earlier on softer demand across most strategic business units.
For the first half (H1 FY2025), net profit plunged 80.4% to RM14.01 million from RM71.61 million a year earlier. Revenue dropped 11.2% to RM493.05 million from RM555.36 million previously.
The cement segment posted a profit before tax (PBT) of RM68.72 million for H1 FY2025, down 3% on slower infrastructure project rollout and weather disruptions.
The road maintenance segment saw a 32% rise in PBT to RM10.02 million on higher ongoing orders and work completions.
Phosphates millstone
However, the phosphates division continues to be a millstone around CMSB’s neck. The segment posted higher losses of RM87.19 million in the first half, versus RM40.45 million previously, dragged down by forex losses.
Its phosphates unit, Cahya Mata Phosphates Industries Sdn Bhd (CMPI), recorded a RM34.17 million unrealised forex loss during the period. This was due to the ringgit strengthening against the US dollar, as the unit carries US dollar-denominated shareholder loans.
CMSB pointed out that excluding the unrealised forex loss, the normalised PBT in H1 FY2025 would have been RM55.18 million.
MBSB Research (formerly MIDF Research) said the phosphates division has yet to generate any revenue as it has yet to achieve commercialisation.
The research house noted the division incurred a loss before tax (LBT) of RM56.2 million for Q2 FY2025, a jump of more than 100% from LBT of RM21.2 million a year ago.
“Recall there is still an ongoing arbitration with Sesco Bhd following a dispute that led to the electrical supply termination to (CMPI’s) phosphate plant in Samalaju; and no phosphate can be sold until the arbitration is concluded,” it said in a note today.
However, it added the management has guided that the plant’s commissioning “remains on track”, with commissioning to resume in Q4 CY2025. “Once operational, the end products are targeted for export to Japan, Korea and Russia,” it said.
MBSB has lowered its core earnings estimates for FY2025E/FY2026F by -14.2% and -10% respectively.
However, it maintained its “buy” call with a lower target price of RM1.49 as “CMSB remains fundamentally supported by multiple near-term and structural catalysts”.
“The anticipated rollout of major infrastructure and construction projects in Sarawak is expected to drive stronger job flows, placing CMSB in a favourable position given its role as the state’s sole cement producer and primary supplier,” it added.
