Cahya Mata Sarawak Bhd’s (CMSB) shares got a boost today after state utility firm Syarikat Sesco Bhd (Sesco) reconnected electricity supply to its phosphate plant, more than two years after it was cut off.
The Sarawak conglomerate rose as much as 8% or nine sen to RM1.29, its highest level in six weeks. However, it gave back most of the gains when it ended 0.8% or one sen higher at RM1.21, valuing the group at RM1.3 billion.
A total of 13.8 million shares changed hands, more than double the daily average volume of 5.64 million shares.
CMSB said Sesco had restored power to its phosphate plant in Samalaju Industrial Park yesterday, enabling its subsidiary Cahya Mata Phosphates Industries Sdn Bhd (CMPI) to complete testing and commissioning activities.
“The reconnection of the electricity supply allows CMPI to prepare for the recommencement of phosphates production which is expected to contribute positively to the operational and financial performance of the group moving forward,” it said in a bourse filing yesterday.
The power supply was cut on July 10, 2023 due to a dispute with Sesco over a power purchase agreement (PPA) signed in 2019.
The reconnection of electricity comes despite arbitration proceedings still ongoing between CMPI and Sesco over the PPA. CMSB’s bourse filing did not provide any details on Sesco’s change of heart.
CMPI initiated the arbitration in November 2022, saying the plant had yet to reach commercial operations when Sesco began billing it for cumulative electricity consumption and payment security shortfalls.
Sesco has counterclaimed RM342.2 million against CMPI for losses and damages. It also commenced arbitration in November 2023 against CMSB over alleged breaches of a corporate guarantee signed in 2019.
Both proceedings have since been consolidated, with hearings scheduled to continue in March 2026.
Weighed down by phosphates division
The phosphates division has been a millstone around CMSB’s neck in recent years. The segment posted higher losses of RM87.19 million in the first half of its financial year ending Dec 31, 2025 versus RM40.45 million previously.
CMPI recorded a RM34.17 million unrealised foreign exchange loss during the period.
Meanwhile, MBSB Research said the reconnection removes a key operational overhang and ensures that commissioning progress can continue uninterrupted.
In a note today, it said once product sales commence, CMPI will become a medium-term earnings driver for the group.
CMSB’s long-term gross profit guidance for the plant is about RM150 million, which MBSB said is broadly consistent with pre-Covid run-rates.
The research house maintained its “buy” call on CMSB with an unchanged target price of RM1.49.
