Saturday, June 5, 2010

Cahya Mata Sarawak benefits from rollout of SCORE projects

June 5, 2010, Saturday

KUCHING: Cahya Mata Sarawak Bhd (CMS) revealed that its construction materials and manufacturing divisions continued to do well, compensating for the weakness faced in other divisions as core net profit reversed from a loss in the first quarter of the financial year 2009 (1QFY09) to RM12.1 million in the first quarter of 2010.A research report released by CIMB Investment Bank Bhd (CIMB Investment) recently noted that its revenue eased by one per cent year-on-year (y-o-y) as an 88 per cent slump in construction revenue wiped out the 15 to 18 per cent y-o-y increase in revenue from the manufacturing and construction material divisions.

The research report highlighted that CMS’ other divisions saw marginal declines in their toplines as group earnings before interest and tax (EBIT) margin expanded from 11 per cent in
1QFY09 to 13 per cent this period, driven by a five percentage point uptick in construction materials EBIT margin to 15 per cent.

EBIT margin for other profitable divisions such as manufacturing and construction, added the research firm, was between six per cent and 21 per cent.

CIMB Investment stated that the construction outlook under the Sarawak Corridor of Renewable Energy (SCORE) was likely to pick up pace as various projects were likely to be rolled out in the medium term.

There was also a change in the research house’s valuation basis from 20 per cent discount to a 10 per cent. This lower discount, it added, reflected the improved construction sector outlook even though there was still no clarity on the progress of its aluminium smelter project in SCORE.

The research house indicated that the rollout of projects under SCORE was likely to gain momentum in the medium term, which could be one of the key features under the 10th Malaysian Plan. (10MP).


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