Cahya Mata Sarawak share plunge deemed as overdone

PETALING JAYA: Shares in Cahya Mata Sarawak Bhd (CMS) extended sharp losses for a second trading day in a row, crashing below the RM2 level for the first time in almost five years, on contract worries.

Some analysts, however, believed that the stock is ripe for the picking.

At yesterday’s close of RM1.92, the stock had halved its value since Pakatan Harapan won the general election on May 9.

RHB Research Institute, in a note yesterday, said that the sell-off on the share price is overdone and will only be temporary.

“This is because we think CMS’ traditional businesses are backed by its expertise and heavy investments in these units. We also believe that the group’s business model remains intact and its income is also well-diversified.

“In addition, we believe CMS’ investments in energy-intensive industries such as OM Material (Sarawak) are expected to reduce its dependency on the Sarawak state government’s economic activities,” it said in a note.

The research firm has reiterated its “buy” call on the cement producer with a target price of RM4.57.

Shares in CMS dropped by nearly 23% or 56 sen yesterday to RM1.92 with 28.93 million shares traded.

The company, which is involved in cement manufacturing, construction materials and property development, among others, was last traded at its lowest level since December 2013.