By Ying Xian Wong
Shares of Cahya Mata Sarawak fell early Thursday after it reported a sharp decline in its third-quarter net profit.
The Malaysia-listed construction and maintenance services provider’s shares fell as much as 7.2% and were recently 6.3% lower at 1.04 ringgit, on track for their second-biggest daily loss in two years.
The company’s net profit fell to MYR9.98 million ($2.1 million) compared with MYR154.4 million a year earlier, mainly weighed by lower contributions from its associates and the absence of one-off gains, it said late Wednesday.
The weak result led analysts to revise their target price on the stock.
Maybank Investment Bank cut Cahya Mata’s target price to MYR1.30 from MYR1.47, as it expects the phosphate division to remain a drag on earnings.
With electricity supply to its phosphate complex terminated in July following a dispute with the Malaysia Sarawak state utility firm, uncertainty over the resumption of power supply for its commercial operations may weigh, Maybank said.
Cahya Mata may face a loss of at least MYR10 million for each month of delay in the commencement of its phosphate subsidiary commercial operations, it said.
Maybank however maintains its buy rating citing the company as “a liquid proxy to higher construction activities in Sarawak”.
MIDF Research also cut Cahya Mata’s target price to MYR1.32 from MYR1.50, and slashed its 2023-2025 earnings forecasts by 24%, 19% and 23%, respectively.
However, the company’s outlook remains positive as it is set to benefit from increased construction job flows in Sarawak, as it is the sole cement producer in the state, MIDF said.
Write to Ying Xian Wong at [email protected]
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