MIDF Research says Cahya Mata’s core net profit declined 46.6 per cent y-o-y to RM19 million in 1QFY24, amid slower activities in the first quarter of the year and losses from its phosphate and services segments.
KUCHING (May 24): Cahya Mata Sarawak Bhd’s (Cahya Mata) performance for the first quarter of the financial year 2024 (1QFY24) came in below expectations, on the back of slower construction activities during the quarter, analysts observed.
According to the research team at MIDF Amanah Investment Bank Bhd (MIDF Research), Cahya Mata’s core net profit declined 46.6 per cent y-o-y to RM19 million in 1QFY24, amid slower activities in the first quarter of the year and losses from its phosphate and services segments.
It noted that its cement revenue came in 6.4 per cent y-o-y lower during the quarter to RM149.2 million, with a lower PBT by 28.6 per cent y-o-y to RM37.6 million.
“There was a drop in sales on the back of slower construction activities during the quarter, which was made worse by the longer rainy weather during the period,” MIDF Research said.
As for its other division, it recorded a higher revenue of RM27.1 million, which came in 24.3 per cent y-o-y while it bounced back into the black at RM5.3 million as compared to a LBT of -RM0.1 million in the same quarter last year.
Meanwhile, the property development division delivered a stronger PBT of RM6.2 million, which grew 6.6-times over the same period last year, attributable to a land sale.
The group’s oil tools division also posted a stronger revenue of 16.7 per cent y-o-y to RM78.2 million, delivering a 3.2-folds higher PBT of RM14.8 million, led by the strong performance and improvement in margins in its operations in Nigeria and Indonesia.
As for its phosphate division, MIDF Research noted that the division has yet to generate any revenue as it has yet to achieve commercialisation stage and it continues to incur losses, though at a decline of 25.2 per cent to -RM19.2 million, attributable to lower operating costs incurred.
Recall that there is an ongoing arbitration with Sesco Bhd following a dispute that led to the electrical supply termination to the phosphate plant in Samalaju.
Despite its weaker-than-expected 1Q, MIDF Research is still optimistic on the group’s outlook.
It said: “In light of the upcoming developments that are expected in Sarawak which will drive stronger construction job flows, we believe Cahya Mata is well positioned to ride on this upside as it is currently the only cement producer in the state and the main supplier.
“We expect ongoing projects such as the Pan Borneo Highway and the upcoming Sabah-Sarawak Link Road (Phase 2) to further improve demand.”
As such, it maintained its ‘buy’ call on the stock.