MBSB Research has maintained a NEUTRAL call on Cahya Mata Sarawak Bhd (CMSB) but cut its target price to RM1.04 from RM1.16, citing weaker-than-expected earnings and delays in the group’s phosphate commercialisation.
The research house expects cement to remain the key earnings driver while major infrastructure projects in Sarawak could support longer-term job flows.
CMSB’s 2QFY26 core profit after tax and minority interest rose 16.7% year-on-year to RM22.9 million, while revenue increased 18.2% to RM292 million. Pre-tax profit improved to RM39.7 million from a loss of RM5.9 million previously, supported by stronger cement, road maintenance and property development earnings as phosphate losses narrowed.
The cement division remained the biggest contributor, with 2QFY26 revenue rising 15.2% to RM168.3 million and pre-tax profit climbing 23.4% to RM39.4 million on higher sales volumes and price revisions. Road maintenance also delivered a stronger quarter, with pre-tax profit more than doubling to RM8.1 million.
However, the phosphate division remained a drag despite narrowing its loss before tax to RM17.1 million from RM56.2 million a year earlier. MBSB Research said yellow phosphorus commercialisation has been pushed back to 4QFY26 from September due to equipment breakdowns during testing and commissioning.
The research house cut its FY26 and FY27 earnings estimates by 20.1% and 19.2% respectively, with the revised RM1.04 target price based on nine times FY27 earnings.
As of 10.38 am, the stock price rose by nearly 4% to RM1.05.
