Stock Name: CMSB
Company Name: CAHYA MATA SARAWAK BHD
Research House: CIMB
Cahya Mata Sarawak Bhd
(Feb 16, RM2.79)
Maintain hold at RM2.82 with revised target price RM3.16 (from RM3): Though the rollout of projects in the Sarawak Corridor of Renewable Energy (SCORE) is likely to gain momentum, there is still little to suggest that the planned Sarawak Aluminium Company Sdn Bhd (Salco) aluminium smelter plant will make swift progress given the unresolved issues for the Bakun dam, which is supposed to supply electricity to the Salco plant.
Earnings drivers for CMS will remain the manufacturing and construction material division which should continue to benefit from the pickup in the rollout of jobs under SCORE and the 10th Malaysia Plan (10MP) in Sarawak.
We maintain our 'hold' rating. Our target price, which is based on a 10% discount to our target market PER, is raised from RM3 to RM3.16 for a higher target market PER of 14.5 times. We prefer Muhibbah Engineering (M) Bhd which is our top small-cap construction pick.
We were too cautious on the stock which rallied in 2010. Stoked by news flow on potential project flows in SCORE and the award of a road project, CMS's share price surged 80% last year, outperforming the construction stocks under our coverage which rose 36% on average.
This year marks the implementation of Phase 2 of SCORE. Various road and infrastructure projects under the 10MP and the Economic Transformation
Programme (ETP) have yet to be implemented. Execution will be a key theme for this year, backed by the 10MP's RM4.6 billion budget for Sarawak.
CMS is likely to release its 4Q10 results in the last week of February. We expect an earnings before interest and tax (Ebit) margin of around 13% to 14% for the full year driven by manufacturing and construction materials.
The Sarawak state election may be around the corner, given the expectations that the general election may be called as early as 2H11. However, the upside from the election factor may already be largely in CMS's share price which shot up 80% in 2010. ' CIMB Research, Feb 16
This article appeared in The Edge Financial Daily, February 17, 2011.
Company Name: CAHYA MATA SARAWAK BHD
Research House: CIMB
Cahya Mata Sarawak Bhd
(Feb 16, RM2.79)
Maintain hold at RM2.82 with revised target price RM3.16 (from RM3): Though the rollout of projects in the Sarawak Corridor of Renewable Energy (SCORE) is likely to gain momentum, there is still little to suggest that the planned Sarawak Aluminium Company Sdn Bhd (Salco) aluminium smelter plant will make swift progress given the unresolved issues for the Bakun dam, which is supposed to supply electricity to the Salco plant.
Earnings drivers for CMS will remain the manufacturing and construction material division which should continue to benefit from the pickup in the rollout of jobs under SCORE and the 10th Malaysia Plan (10MP) in Sarawak.
We maintain our 'hold' rating. Our target price, which is based on a 10% discount to our target market PER, is raised from RM3 to RM3.16 for a higher target market PER of 14.5 times. We prefer Muhibbah Engineering (M) Bhd which is our top small-cap construction pick.
We were too cautious on the stock which rallied in 2010. Stoked by news flow on potential project flows in SCORE and the award of a road project, CMS's share price surged 80% last year, outperforming the construction stocks under our coverage which rose 36% on average.
This year marks the implementation of Phase 2 of SCORE. Various road and infrastructure projects under the 10MP and the Economic Transformation
Programme (ETP) have yet to be implemented. Execution will be a key theme for this year, backed by the 10MP's RM4.6 billion budget for Sarawak.
CMS is likely to release its 4Q10 results in the last week of February. We expect an earnings before interest and tax (Ebit) margin of around 13% to 14% for the full year driven by manufacturing and construction materials.
The Sarawak state election may be around the corner, given the expectations that the general election may be called as early as 2H11. However, the upside from the election factor may already be largely in CMS's share price which shot up 80% in 2010. ' CIMB Research, Feb 16
This article appeared in The Edge Financial Daily, February 17, 2011.
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