Cahya Mata Sarawak sees gradual increase in cement demand

Malaysia-based Cahya Mata Sarawak Bhd (CMS) can expect an improved financial performance this year, given the anticipated gradual recovery in the demand for building materials in Sarawak following the relaxation of movement restrictions.

TA Securities Research said CMS management expects demand for cement to be around 1.6Mt in 2021, backed by ongoing infrastructure projects such as the Pan Borneo Highway, Coastal Road and Baleh Hydro Dam.

The group’s clinker plant is also on track to increase its production to 750,000t and 800,000t for the FY21 and FY22, respectively, to be less reliant on imported clinker.

Meanwhile, AmInvestment Bank Research estimated that CMS’ dependence on clinker imports, which are largely from Peninsular Malaysia and other parts of southeast Asia, will decline to a share of clinker requirement of between 45-50 per cent from 60 per cent previously. The sizes of the clinker and cement markets in Sarawak are about 1.4Mta and 1.7Mta, respectively.

For the construction materials and trading division, TA Securities pointed out that CMS management guided that the demand for aggregates has started to pick up and the group is looking for a new quarry to increase the current production capacity.

The order book for its construction division stood at MYR1.2bn (US$295.8m) as at the 4Q20.