Cahya Mata Sarawak: Navigating Q1 2025 Amidst Weather Woes and Forex Swings
Greetings, fellow investors! Today, we’re diving into the latest financial report from Cahya Mata Sarawak Berhad (CMS), a prominent Malaysian conglomerate with diverse interests ranging from cement to property development. The Group has just released its first quarter results for the period ended 31 March 2025 (PE2025), offering us a glimpse into its performance amidst prevailing market conditions.
While the report highlights a dip in overall revenue and profit before tax (PBT) compared to the previous year, it also underscores the Group’s underlying financial resilience and strategic efforts to navigate challenges. A key takeaway is the significant impact of external factors, particularly a prolonged rainy season in Sarawak and fluctuating foreign exchange rates. Let’s break down the numbers and understand what’s shaping CMS’s journey.
Core Financial Highlights: A Closer Look at the Numbers
Cahya Mata Sarawak reported a revenue of RM246.13 million for PE2025, a decrease from RM277.37 million in the same period last year (PE2024). This reduction was primarily attributed to a severe and prolonged rainy season in Sarawak, which significantly hampered the Group’s operations, particularly in construction-related segments.
Profitability Overview
The Group’s profit before tax (PBT) for PE2025 stood at RM26.87 million, a notable drop from RM57.26 million in PE2024. A significant factor in this decline was unrealized foreign exchange (forex) movements. For PE2025, the Group incurred an unrealized forex loss of RM5.75 million, a stark contrast to an unrealized forex gain of RM16.31 million in PE2024.
After excluding this unrealized forex impact, the normalized PBT for PE2025 was RM32.62 million, representing a 20% decrease compared to the normalized PBT of RM40.95 million in PE2024. This normalized view gives us a clearer picture of the operational performance, free from the volatility of forex fluctuations.
PE2025 Financials
Revenue: RM246.13 million
PBT: RM26.87 million
Normalized PBT: RM32.62 million
Unrealized Forex Loss: RM5.75 million
PE2024 Financials
Revenue: RM277.37 million
PBT: RM57.26 million
Normalized PBT: RM40.95 million
Unrealized Forex Gain: RM16.31 million
Financial Health Indicators
Despite the challenges, Cahya Mata continues to exhibit strong financial resilience. The Group maintains a healthy cash position of RM691.14 million. Key financial ratios further underscore this strength:
| Financial Metric | PE2025 |
|---|---|
| Net Tangible Assets (NTA) per share | RM3.13 |
| Net Asset per share | RM3.19 |
| Gearing Ratio | 0.06 times |
A very low gearing ratio of 0.06 times indicates prudent leverage management, suggesting the Group is not heavily reliant on debt and has ample room for future growth or to weather economic headwinds.
Diving Deeper: Performance by Strategic Business Units (SBUs)
Understanding the performance of each SBU provides valuable insights into the Group’s diversified operations:
Cement SBU
The Cement SBU reported a revenue of RM143.18 million in PE2025, slightly down from RM149.18 million in PE2024, mainly due to prolonged rainfall and slow progress of key infrastructure projects. However, profitability saw a positive trend, with PBT increasing to RM36.76 million from RM26.80 million in PE2024, attributed to lower costs.
Road Maintenance SBU
This SBU showed robust growth, with revenue climbing to RM42.65 million (PE2024: RM27.14 million) and PBT rising to RM7.00 million (PE2024: RM5.32 million). This improvement was driven by higher ongoing orders and work completions under the Long-Term Maintenance and Management Contract (LTMM).
Property Development SBU
The Property Development SBU faced a tougher quarter, reporting a revenue of RM8.45 million and a loss before tax (LBT) of RM1.26 million in PE2025. This contrasts with PE2024’s revenue of RM13.75 million and PBT of RM6.19 million, where a deemed land sale transaction had boosted performance.
Phosphates SBU
The Phosphates SBU recorded a higher loss before tax of RM31.00 million in PE2025, compared to an RM19.23 million loss in PE2024. This increase in loss was primarily due to unrealized forex losses in PE2025, reversing the unrealized forex gains seen in PE2024.
Oiltools SBU
The Oiltools SBU experienced a significant decline, with revenue at RM43.34 million (PE2024: RM78.15 million) and PBT at RM4.22 million (PE2024: RM14.84 million). The decrease was mainly a result of reduced rig activities across most markets compared to the previous year.
Strategic Investments SBU
This SBU reported a lower PBT of RM0.16 million in PE2025 compared to RM7.17 million in PE2024. The reduction was largely due to unrealized forex losses and fair value losses in investment securities during PE2025, unlike the gains observed in PE2024.
Prospects and Navigating the Road Ahead
Looking forward, Cahya Mata Sarawak remains optimistic about its prospects. The Group anticipates an improvement in weather conditions for the remainder of the year, which should pave the way for the resumption of construction activities. Given Sarawak’s ongoing development initiatives, the prospects for construction activities are expected to remain strong, providing a solid foundation for the Group’s core businesses.
Furthermore, the recent weakening of the US Dollar against the Malaysian Ringgit is expected to be a favorable development, potentially benefiting the Group’s supply chain costs. This could provide a much-needed tailwind, especially for segments exposed to international procurement.
Summary and
Cahya Mata Sarawak’s Q1 2025 results reflect a challenging quarter, primarily impacted by adverse weather and significant unrealized foreign exchange movements. While the headline revenue and PBT figures show a decline, the normalized PBT provides a clearer picture of operational performance, indicating a moderate decrease. The Group’s strong cash position and exceptionally low gearing ratio highlight its robust financial health and ability to withstand external shocks.
The diversified nature of its business units means that while some, like Oiltools and Property Development, faced headwinds, others, such as Road Maintenance and Cement (in terms of profitability), demonstrated resilience or growth. The management’s outlook points to potential improvements driven by better weather and a favorable forex environment.
As retail investors, it’s crucial to consider both the challenges and the underlying strengths. The Group’s foundational values, operational excellence, and long-standing presence in Sarawak’s development narrative are important factors to monitor. The ability to manage costs, as seen in the Cement SBU, and capitalize on ongoing infrastructure projects will be key to its future performance.
Key points to consider moving forward include:
- The sensitivity of operations to weather patterns, particularly in Sarawak.
- The impact of foreign exchange rate fluctuations on profitability, especially unrealized gains/losses.
- The recovery trajectory of the Oiltools SBU amidst global rig activity trends.
- The performance of associates and joint ventures, and their contribution to overall results.
- The ability to leverage the strong financial position for strategic growth or to mitigate risks.
Your Thoughts?
Cahya Mata Sarawak has navigated a challenging quarter, but its financial bedrock appears solid. Do you think the anticipated improvement in weather conditions and the weakening USD will be enough to propel the Group back to stronger growth in the coming quarters? Share your insights and perspectives in the comments section below!
