Thursday 28 Mar 2024
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KUALA LUMPUR (Apr 15): Cahya Mata Sarawak Bhd (CMSB) share price rose as much as 4 sen or 0.83% to RM 4.85 this morning on news that it has bagged a RM308 million contract from the Sarawak government to build a world-class museum and heritage trail in Kuching, Sarawak.

In a note today, Maybank IB Research said that the contract represents the first major construction job win for CMSB since 2009, lifting its orderbook significantly by 51% to an estimated RM908 million.

“Assuming a gross margin of 6%, we forecast a net profit contribution of RM14 million into 2020. This translates into earnings per share (EPS) of 1.3 sen to be recognised over the next 5 years, we maintain our forecasts as the earnings impact is minor,” said Maybank IB.

The research house added this could be a prelude to more construction job wins for CMSB in the near term, especially that relating to the Pan Borneo Highway and Sarawak Corridor of Renewable Energy.

“Meanwhile, its cement and construction materials businesses are key beneficiaries of the growing construction activities driven by the upcoming Sarawak state election, Pan Borneo Highway works and the 11th Malaysia Plan,” added Maybank IB.

The research house maintained its buy call on CMSB, but said that its sum of parts target price of RM5 for the company is under review pending the completion of CMSB’s acquisition of Sacofa Sdn Bhd.

At 10.35am, CMSB (fundamental: 3; valuation: 1.1) shares had erased 0.41% of its earlier gains and was trading at RM4.83 with 418,900 shares changing hands, and a market capitalisation of RM4.99 billion.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)

 

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