KUALA LUMPUR (Aug 7): Cahya Mata Sarawak Bhd (CMSB) declined as much as 2.49% this morning, as AllianceDBS Research projected dwindling earnings for the company in the upcoming years owing to lower contributions from its associate OM Materials (Sarawak) Sdn Bhd (OM Sarawak).

At the midday break, CMSB was down 7 sen to RM2.74 for a market capitalisation of RM2.94 billion.

In a note yesterday, AllianceDBS Research downgraded CMSB to "hold" with a lower target price of RM3.10, from RM3.80 previously, and cut its forecast for CMSB earnings for financial year 2019, 2020, 2021 by 20%, 22%, and 14% respectively, largely to factor in lower contributions from 25%-owned OM Sarawak.

AllianceDBS Research analyst Abdul Azim Muhthar said the weaker profits expected from OM Sarawak are due to the depressed manganese and ferrosilicon prices, which will more than offset the improved contributions from CMSB's cement and construction materials business.

"As a result, we expect CMSB FY19F earnings to contract 12%," he said.

OM Sarawak owns a ferrosilicon and manganese alloy smelting plant in Samalaju Industrial Park, Bintulu.

See also: AllianceDBS Research downgrades Cahya Mata Sarawak, cuts target to RM3.10