KUCHING: Cahya Mata Sarawak Bhd (CMS) continues to catch the eye of regional investors, particularly in Hong Kong, on its unique position as an excellent proxy for the Sarawak Corridor of Renewable Energy (SCORE).
Last week, the group participated in Invest Malaysia-Hong Kong 2014 event which was jointly organised by Bursa Malaysia and RHB Investment Bank Bhd.
Analysts with RHB Research Institute Sdn Bhd (RHB Research) said CMS’ meeting slots were well attended by both new and existing investors.
“Key topics of discussion with the management of this Sarawak-based conglomerate were its growth prospects moving forward,” it detailled in a report yesterday.
“This was especially after CMS’ turnaround in late 2010.
“Investors were generally convinced by its outlook, driven by the initiatives rolled out at the SCORE economic region.”
Meanwhile, the first two furnaces of CMS’ 20 per cent-owned OM Materials (Sarawak) Bhd’s (OMS) smelter were just commissioned. RHB Research expect Phase 1 of the OMS project to reach full commissioning by the end of the second quarter of 2015.
“Hence, it will be the main earnings driver for FY15 while other divisions ought to indirectly benefit from the developments at SCORE.”
In terms of long term potential, RHB REsearch said phase 2 of OMS is currently on the drawing board, with construction possibly beginning in 2H15. Thus, its contribution can be expected from FY16 onwards.
CMS’ Malaysian Phosphate Additives SB (MPA) project is also progressing well while 51 per cent-owned Samalaju Property Development Sdn Bhd may offer some upside.
CMS is also in the midst of installing a brownfield one million tonne per annum grinding plant next to its clinker facility to meet growing demand from the second half of 2016 onwards.
“As such, Investors’ expectations on CMS’ huge cash pile is high,” RHB Research opined.
“Most believe that this allows the group to take on projects with attractive returns that may arise from SCORE or other opportunities.
“These would eventually lift CMS’ future earnings potential. With that, we maintain our buy rating on CMS and a target price of RM5, which is derived from a sum-of-parts valuation methodology.”