SO Cahya Mata Sarawak Bhd has taken an initiative in the right direction to dive deep into probing the recent allegation surrounding its group chief financial officer’s (CFO) mismanagement in relation to investment and contract losses in the Pan Borneo Highway project from 2016 to 2020.
Towards this end, the conglomerate which is linked to the family of Sarawak Governor Tun Abdul Taib Mahmud has appointed KPMG Management & Risk Consulting Sdn Bhd to review the said allegation on Syed Hizam Alsagoff.
While being hopeful that the independent review can be concluded soonest, Cahya Mata further noted that the 30-day suspension of its group CFO has been extended by 60 days to facilitate an independent review by KPMG which was appointed last week.
Moving away from the corporate governance saga, TA Securities Research said it remained cautious over the near-term outlook for Cahya Mata following disruptions on its traditional core businesses with the imposition of the full movement control order (FMCO).
“Although most of the traditional core businesses are allowed to operate during the movement control order (MCO) in Sarawak, the management guided that all business divisions are expected to experience some near-term disruptions due to restrictions in the workforce capacity,” revealed analyst Chan Mun Chun in a company update.
Nevertheless, the group is expected to benefit from strong earnings growth in OM Materials Sarawak Sdn Bhd (OMS) which is the group’s flagship smelter complex in Samalaju (Sarawak) as a result of higher commodity prices.
“On the other hand, we believe the expiry of concession in Sacofa Sdn Bhd (Sarawak’s leading telecommunication infrastructure provider) will remain a near-term concern given that it has been providing a strong and stable recurring income to the group,” opined TA Securities Research.
Nevertheless, the research house retained its “buy” rating on Cahya Mata with a target price of RM2.40/share based on sum-of-parts (SOP) valuation.
Meanwhile, Maybank IB Research is concerned over the temporary halting of OMS’ production on May 28 after a lockdown of its workers’ dormitories due to COVID-19 cases.
“Four out of its 12 furnaces are currently down and OMS is working with the authorities to re-start operations,” disclosed head of research Wong Chew Hann.
“At MPA (Malaysian Phosphate Additives (Sarawak) Sdn Bhd), the completion of Phase 1 construction and its commissioning are delayed again as specialist workers from China are unable to enter Sarawak due to travel restrictions. Full commercial operation is now expected in August 2021 (from March 2021).”
All-in-all, Maybank IB Research maintained its “hold” call on Cahya Mata with a target price of RM1.73.
At 11.37am, Cahya Mata was down 1 sen or 0.62% to RM1.59 with 839,000 shares traded, thus valuing the company at RM1.71 bil. – June 4, 2021
