Cahya Mata Sarawak Bhd's (CMS) construction materials and cement divisions are expected to continue driving the group in the near to long term future, underpinned by an expected increase in demand for materials for the development Pan Borneo Highway and Baleh Dam.

Following a visit to CMS, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) pointed out that the Pan Borneo project is expected to increase the demand for crushed stone aggregates such as microtonalities and limestones.

In addition, CMS's cement division is also expected to see further earnings growth as Baleh Dam in Kapit is set to start its construction in June 2018.

The dam is an 188 metres high concrete rock fill dam which could require circa 500 million cubic meters of concrete or 1.2 million tonnes of concrete minimally, the research team estimated.

"We are expecting that the two key divisions will support earnings from the periods of the first quarter of the financial year 2018 (1QFY18) to 3QFY20 due to billings recognition from Pan Borneo and Baleh Dam" it opined.

The research team further explained that for the past eight years, construction materials' segment has contributed 30 percent of CMS' revenue.

"We are expecting that the construction materials revenue will maintain its growth trajectory and meet our revenue estimates for FYE17 and FYE18.

"Our conviction is premised by Sibanyis quarry's reserves of 63 metric tonnes which account for 90.9 percent of CMS' quarry reserves coupled with the progress rate of Sarawak's portion of Pan Borneo highway (881km) which we estimate to be within three to four per cent range" it said.

CMS is expected to start the second production line of Sibanyis quarry by the end of June 2018 to meet the demand especially for the central and northern region of Pan Borneo's packages with a production capacity of 1.3 metric tonnes annually.