Cahya Mata slides to two-month low after missing earnings estimates

• Net profit for the first six months only accounted for just one-third of the consensus full-year estimates, though analysts say Cahya Mata could still catch up in the coming months as construction activities pick up with drier weather that will boost demand for its cement and aggregates.

KUALA LUMPUR (Aug 21): Cahya Mata Sarawak Bhd (KL:CMSB) fell to a two-month low on Thursday, after the construction materials company reported a weaker-than-expected second quarter.

Net profit for the first six months only accounted for just one-third of the consensus full-year estimates, though analysts say Cahya Mata could still catch up in the coming months as construction activities pick up with drier weather that will boost demand for its cement and aggregates.

“We expect more robust construction activities and the commissioning of its phosphate plant to positively impact earnings” in the second half of the year, said Maybank Investment Bank.

The research house is keeping its ‘buy’ call and target price of RM1.66 ahead of an analyst briefing scheduled for Friday.

Shares of Cahya Mata fell as much as 7% to RM1.10, its lowest since June 24. At 9.30am, Cahya Mata was trading at RM1.13, giving the company a market capitalisation of RM1.2 billion. Trading volume totalled 4.5 million shares so far.

While Cahya Mata has rebounded off April lows during the global market turmoil, Thursday's decline dragged the stock marginally below where it began the year. All three analysts covering the company have ‘buy’ calls.

“Looking ahead, the anticipated rollout of major infrastructure and construction projects in Sarawak is expected to drive stronger job flows”, which will benefit the company given its role as the state’s sole cement producer and primary supplier, said MBSB Research.

Further, the RM550 million Borneo Convention Centre Kuching II project secured has already begun construction works and is expected to deliver “meaningful earnings contributions in the coming quarters”, the research house added.

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