KUALA LUMPUR: MIDF Research has maintained a positive outlook for Cahya Mata Sarawak Bhd (CMSB), pending further developments on the arbitration of the dispute between CMSB's subsidiary Cahya Mata Phosphates Industries Sdn Bhd and Syarikat SESCO Bhd (Sesco).
In a note today, the research house said it remains optimistic that it would be able to be resolved amicably, for the betterment of Sarawak's economy.
"The group's integrated phosphate complex in Samalaju is the only one of its kind in Malaysia whereas in the region, there has been no new entrant at least over the past decade in a market dominated by Vietnam and Kazakhstan producers.
"CMSB's plant has an annual capacity of 57,600 metric tonnes or 288,000 drums.
"Management's initial target for commercialisation was mid-2023, though we do not discount the possibility of delays due to the ongoing dispute," it added.
Yesterday, CMSB announced that its main arbitration process with Sesco regarding the power purchase agreement (PPA) remains ongoing.
The company said that both Sesco and Cahya Mata Phosphates Industries had appointed their respective arbitrators, and were currently awaiting the appointment of the third arbitrator by the Asian International Arbitration Centre (AIAC).
There is, however, a delay in the process due to the delay of the appointment of the AIAC director, as the position was vacant for three months from December last year until the new director was appointed in March 2023.
CMSB has reaffirmed its dedication to protecting its rights and will continue to pursue possible ways to resolve the matter amicably.
On that note, MIDF Research said it remains sanguine on CMSB's earnings outlook in the financial year 2023 (FY23), as the expected improvement in construction job flows would benefit the group in terms of cement supply, construction projects, and road maintenance jobs.
The research house has reiterated its buy recommendation on CMSB, with an unchanged target price of RM1.55.
It has also maintained its projections for earnings estimates pending further developments of the dispute.