The Edge Financial Daily, Photo Credit to The Edge Financial Daily
clock 26-04-2017
hit 2,674
Pan Borneo Highway Set to Boost CMS Earnings

Cahya Mata Sarawak Bhd (CMS), which has been awarded a Pan Borneo Highway contract, expects to benefit even more from the spillover effects of the mega highway project.

Its managing director (MD) Datuk Richard Curtis said the project will beef up demand for construction materials and, more significantly, cement in Sarawak. CMS is the sole cement producer in the country's largest state.

"It is estimated that the project would need up to a million tonnes of cement over the course of the construction of the Pan Borneo Highway [in Sarawak]. So this will increase demand for cement" said Curtis.

"This demand will not be so visible in 2017, so we will see that impact in our P&L (profit and loss statement) in 2018 onwards" he said in an interview with The Edge Financial Daily during Maybank Investment Bank's "Invest Asean” forum in Singapore recently.

A similar view was offered by AmInvestment Bank Bhd. In a research note last month, it said that with mega infrastructure projects such as the Pan Borneo Highway and Sarawak Corridor of Renewable Energy, demand for cement and building materials will increase tremendously and result in higher earnings for CMS.

Last July, a joint venture between CMS' 51%-owned subsidiary PPES Works (Sarawak) Sdn Bhd and Bina Puri Holdings Bhd's wholly-owned unit Bina Puri Sdn Bhd secured a RM1.36 billion contract from Lebuhraya Borneo Utara Sdn Bhd, the project delivery partner for the Sarawak portion of the Pan Borneo Highway.

Curtis said the overall infrastructure development activities in Sarawak have been regaining momentum after construction work for the 1,073km highway began.

"We are positioning all our companies to meet this local demand. We expect this year's profits to recover. If you look at the second half of last year, when our profits returned to normality, you can see what is likely to happen this year" he said.

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