KUALA LUMPUR (May 19): MIDF Research has maintained its 'buy' call on Cahaya Mata Sarawak Bhd (CMSB) with an unchanged target price of RM1.62, following its better core earnings in the first quarter ended March 31, 2022 (1QFY22).
CMSB's core earnings grew 65.6% year-on-year (yoy) to RM73.9 million, driven mainly by improved performances of its cement and road maintenance divisions, while the group’s share of results from its associates gave it an extra boost.
In a note on Thursday (May 19), the research firm said CMSB's results came in above its expectation at 36% of FY22 earnings estimate.
"The relaxation of the country’s Covid-19 restrictions allowed activities across various sectors to pick up pace, leading to improved demand for cement which is CMSB’s main revenue generator.
"The division saw an improvement of 6.6% yoy for the quarter to RM136.6 million, while its profit before tax came in at RM29.2 million, a growth of 34.1% yoy," it said.
Hence, MIDF Research expects the division to continue anchoring the group’s improving performance moving forward, coupled with the new cost efficiency initiatives that the division is undertaking.
"We maintain our FY22E figures as previously forecast at RM1.17 billion of revenue and a core net profit of RM205.6 million, as we believe it is still in line with our view and expectations of its future financial performance, supported by Malaysia’s transition into endemicity.
"We, however, revise our FY23F revenue slightly downwards to RM1.19 billion (previously: RM1.23 billion) and core earnings to RM205.6 million (previously:RM225 million), taking into consideration potential delays in projects," it added.
At 5pm, CMSB shares settled up 1 sen or 0.92% at RM1.10, with 6.12 million shares traded, giving it a market capitalisation of RM1.17 billion.