Q4 result much lower than expected mainly due to cement plant under Maintenace, unable to capitalize on higher cement price. Profit also drag down by startup cost for newly built phosphorus plant, which should only commercial operation in 2023.
Overall, CMSB cement division after shutdown for maintenance should benefit strongly from 2023 onward to capitalize on much lower feedstock thermal coal cost and elevated selling price and strong demand volume from Sarawak booming infrastructure work.
CMSB turn from net debt to net cash position RM 427m or about 43sen/share form as much as 31% of current market price and declare 3 sen as dividend.
Strong balance sheet with Net cash 42sen/share + higher cash dividend 3sen, should cushion downside risk while awaiting cement reopening after shutdown maintenance in Q4 to boosts up profitability forward.
The company's net cash position is actually more than RM 600mil or more than 55 sens per share if we include the investment securities which are debt and money market securities.
The growth for CMSB will actually come from their interest in the Phosphate business. Management is projecting that the business will turn cash flow breakeven in the current FY and P&L breakeven in 2024. By 2025 they are projecting that the business will deliver a PATAMI of RM50 mil to the group annually. That being said, all of this is based on the yellow phosphorus price of around USD4,000/MT. Current yellow phosphorus price in South East Asia is more than USD7,000/MT and in China it is around USD 5,300/MT. Refer to link: https://businessanalytiq.com/procurementanalytics/index/yellow-phosphorus-price-index/
Another growth potential will be their new O&G business that they acquired from Scomi. CMSB is considered as the front runner for the USD 400mil Petronas' drilling fluids tender in Sarawak. The current contract will end in 2H23 so the award should be made soon. Still not clear on the potential profit margin of this tender. Appreciate if anyone has an insight on this. My friends in the O&G industry indicate that it's around 10 % profit margin but they are mostly operational guys and not really financial. So not sure of their numbers. Thanks.
CMSB is very rare conglomerate and yet in net cash position. Its business empire spanning from cement, construction, property, road maintenance, have associate listed kenanga and kkb + upcoming new phosphorus manufacture plant and newly acquire scomi oil and gas service provider.
Cement main feedstock energy provider thermal coal now at lowest year level, offer great profit margin forward
Insas essentially is investment holding company, have no core business operating. Therefore, insas need to conserve cash in order to invest in both listed or unlisted company and highly dependent on these investment return to generate income for insas. Thus, cannot ascribe normal valuation to reach fair value for insas due to fact that it relying on indirect profit from invested company and record profit through dividend/share of profit from invested company.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
pang72
51,533 posts
Posted by pang72 > 2023-02-27 19:02 | Report Abuse
Is the QR 2. 99c considered good?
Need sifu sifu advise!