Corporate

Presentation

Second Quarter
FY2020 Results Briefing
September 2020
CMSB At A Glance
Traditional Core Businesses Strategic Investments

Cement
Clinker, cement & concrete
products

25% 60% 50%

Construction Materials & OM Materials Malaysian Phosphate SACOFA
Trading (Sarawak) Additives (Sarawak)
Quarrying, premix Ferrosilicon & manganese alloys Information & Communication
Integrated phosphate complex
manufacturing, wire production smelter Technology
& trading activities

Construction & Road

Maintenance
Infrastructure construction &
state roads maintenance
26.25% 20%
Kenanga KKB Engineering
Property Development Investment Banking Oil & Gas and Utilities Engineering
Township development in Listed on Bursa Malaysia Listed on Bursa Malaysia
Sarawak

1
2Q 2020 Results Highlight
2Q 2020 FINANCIAL RESULTS COMMENTARY
REVENUE (RM’mil)
• Revenue dropped 48% YoY and 27% QoQ to RM206.8
YoY QoQ
-48% -27% million in 2Q 2020.
399.2
282.5
206.8
• Subsequently PATNCI dropped 60% YoY and 3% QoQ to
RM16.7 million in 2Q 2020.
2Q19 1Q20 2Q20
Q2FY19 Q1FY20 Q2FY20 • The softer performance was mainly due to lower
contribution from its traditional core businesses as a
PATNCI (RM’mil)
result of Movement Control Order (“MCO”) lockdown
YoY QoQ
-60% -3% which reduces the number of operational days.
41.3
• Lower contribution from traditional core businesses is
17.3 16.7
partially cushioned by higher contribution from
associates mainly SACOFA, KKB Engineering and
2Q19
Q2FY19 1Q20
Q1FY20 2Q20
Q2FY20
Kenanga Investment Bank.

2
1H 2020 Results Highlight
REVENUE (RM’mil)
YoY
-40% 817
1H 2020 FINANCIAL RESULTS COMMENTARY
489

• Revenue dropped 40% YoY to RM489.3 million in 1H 2020

while PATNCI dropped 59% YoY to RM34.0 million in 1H
1H19
1HFY19 1H20
1HFY20 2020.

PATNCI (RM’mil) • The softer performance was mainly due to lower

YoY
contribution from its traditional core businesses as a
-59% 82
result of Movement Control Order (“MCO”) lockdown in
particularly 2Q 2020.
34

1H19 1H20
1HFY19 1HFY20

3
Traditional Core Businesses - Cement

1H 2020 RESULTS
(RM’ mil) • Revenue dropped 31% YoY to RM195.0 million mainly due to shorter operating
days for both cement and concrete division due to MCO lockdowns.
284

• Division’s effort to improve cost efficiency coupled with lower imported clinker
195

cost and discharging cost, resulted in cost savings in the current period.
32
REVENUE

19
PBT

1H19 1H20 1H19 1H20

MOVING FORWARD
• Initiate catch-up strategies to mitigate the impact of closed operations.
• Stabilise clinker plant’s operation to gradually increase production to 750k in 2021 and 800k in 2022.
• Supply 400k of cement for construction of the Baleh Hydro Dam over 3 years from 2020 to 2022.
• The Division is well positioned to capitalize on opportunities in the potential spike of major infrastructure projects in the State.

4
Traditional Core Businesses - Construction Materials & Trading

1H 2020 RESULTS
(RM’ mil) • Revenue dropped 47% YoY to RM133.8 million mainly due mainly due to shorter
operating days in 2Q 2020.
255

• Consequently, this Division’s PBT dropped by 76% YoY to RM9.7 million in 1H 2020.

• The drop in PBT YoY was partially attributable to impairment of trade receivables
134

40
REVENUE

of RM1.5 million in 1H 2020 and recognition of one-off provision reversal amounting

10
to RM9.0 million in 1H 2019.
PBT

1H19 1H20 1H19 1H20

MOVING FORWARD
• Initiate catch up strategies to mitigate the impact of closure of operations due to MCO from 18 March to 27 May.
• On 28th August 2020, CMSB undertook 2% sale in CMS Resources Sdn Bhd (“CMSR”), the holding company for quarry and
premix business.
• Post completion, CMSR will be 49% joint venture where CMSB will continue to manage CMSR’s day-to-day operations.
• This transaction will put CMSB in a stronger footing to capture opportunities from the infrastructure developments in the State
especially with several mega infrastructure projects are underway or in the pipeline.

5
Traditional Core Businesses - Construction & Road Maintenance

1H 2020 RESULTS • Revenue decreased by 37% YoY to RM151.7 million in 1H 2020 due to lower
(RM’ mil) contribution from both Construction and Road Maintenance.

• 1H 2020 construction business revenue dropped mainly due to minimal operations

during the 2Q 2020.
241

34
• Road Maintenance business revenue dropped due to shorter state road
152
REVENUE

maintenance of 3,300km under the new 10- year State Road Management and
Maintenance contract compared to 6,262km previously.
11
PBT

1H19 1H20 1H19 1H20 • Consequently, the PBT dropped by 67% YoY to RM11.3 million in 1H 2020.

MOVING FORWARD
• Initiate catch-up strategies to mitigate closure of construction works due to MCO from 18 March to 27 May.
• On 28th August 2020, the CMSB undertook 2% sale in PPES Works (Sarawak) Sdn Bhd (“PPESW”), the holding company for
construction business.
• Post completion PPESW will be 49% joint venture where CMSB will continue to manage PPESW day-to-day operations.
• This transaction will put CMSB in a stronger footing to capture construction opportunities from the infrastructure developments
in the State especially with several mega infrastructure projects are underway or in the pipeline.

6
Traditional Core Businesses - Property Development

1H 2020 RESULTS
(RM’ mil)
• Revenue decreased by 63% YoY to RM28.9 million in 1H 2020 mainly due to lower
78

properties sales and lower land value sold in 1H2020.

• Consequently, the PBT dropped by 73% YoY to RM5.6 million in 1H 2020.

REVENUE

21
29

PBT

1H19 1H20 1H19 6

1H20

MOVING FORWARD
• Embarking on the following strategies to counter subdued property market outlook:
✓ Focus on affordable housing projects;
✓ Pursue development in Southern Kuching where development value is higher; and
✓ Potential landbank at market value of RM1.4 billion to be unlocked.

7
Strategic Investments - OM Materials (Sarawak)

1H 2020 RESULTS • Revenue and PAT dropped due to lower commodity prices due to subdued
(RM’ mil) global economy.

• The lockdown in Sarawak had also resulted in travel restriction for skilled workers
from China, hence furnaces in operation is 7 Ferrosilicon and 6 Manganese alloys
986

during the period.

9
711
REVENUE

• OM Sarawak contributed RM1.8 million to CMSB’ share of associates in 1H 2020

0.7
PBT

compared to a profit of RM5.4 million in 1H 2019.

1H19 1H20 1H19 1H20

MOVING FORWARD
• The COVID-19 pandemic has impacted both consumer demand and supply from steel produces. However, steel mills in
China have restarted operations and other economies in the region are gradually recommencing.
• Invested AUD20 million to install a sinter plant which will further lower manganese alloy production cost.
• Proceeding with Phase 2 which involves:
I. Modification of 2 existing ferrosilicon furnaces to produce Metallic Silicon and Silicomanganese; and
II. Construction of up to 4 more manganese alloy furnaces targeted for completion by 2022.
• This will further add economies of scale.

8
Strategic Investments - Malaysian Phosphate Additives (Sarawak)

CAPACITY & CAPEX

• Project is implemented in 2 phases
• Phase One - 3 manufacturing plants
• Products & Capacity-
• 48,000 MT of Yellow Phosphorous
• 75,000MT of Technical Grade Phosphoric Acid
• 60,000 MT of Food Grade Phosphoric Acid
• Targeted commissioning - 1Q 2021
• Investment cost- ~RM898 million

INVESTMENT RATIONALE

• New growth opportunity leveraging on competitive electricity

rates and strategic location in Samalaju.

• Project is scalable to develop downstream manufacturing of

industrial chemicals and semi-conductor products.

9
Strategic Investments - SACOFA

1H 2020 RESULTS
(RM’ mil) • 1H 2020 revenue and PBT increased mainly due to higher tower rental income.

• PBT grew by 63% YoY to RM65.2 million in 1H 2020 backed by strong margin of 51%.
127

• SACOFA contributed RM24.5 million to CMSB’ 1H 2020 share of associates, 60%

99

higher compared to 1H 2019 of RM15.3 million.

REVENUE

65
• New competitors emerged in 2019 but SACOFA will remain dominant by virtue of
40
PBT

its first mover advantage.

1H19 1H20 1H19 1H20

MOVING FORWARD
• Proactively expanding its fibre optic cable portfolio throughout the State, increasing broadband coverage which is essential
for the expected deployment of 5G and proliferation of IoT in the State.
• In strong position to capitalize on the State’s initiatives to invest RM1.15 billion for telecommunication infrastructure
development.

10
Strategic Investments - Kenanga Investment Bank

1H 2020 RESULTS
(RM’ mil) • Kenanga’s 1H 2020 revenue improved by 5.4% YoY to RM374.8 million mainly due
to higher interest, brokerage fee and management fees income.
375

• However, the Group’s 1H 2020 PBT dropped by 5.8% YoY to RM18.3 million due to
LBT of RM7.6 million in 1Q 2020.
19

18
REVENUE

• Kenanga contributed RM3.5 million to CMSB’ 1H 2020 share of associates

326

compared to RM3.4 million in 1H 2019.

PBT

1H19 1H20 1H19 1H20

MOVING FORWARD
• Growth outlook remains uncertain given the impact of the COVID-19 pandemic and oil price volatility on Malaysia’s
economic growth.
• Continue with innovation & digitalization of its core products to diversify revenue streams and capture new market segment
while continues to increase its cost effectiveness.

11
Strategic Investments - KKB Engineering

1H 2020 RESULTS • KKB Engineering’s 1H 2020 revenue dropped by 17% YoY to RM197.4 million mainly
(RM’ mil) due to impact of COVID-19 and MCO.

• The implementation of MCO has resulted in minimal operational activities and

238

slower progress billings for the on-going contracts hence lower revenue
197

recognition.

22
REVENUE

• Despite lower revenue, PBT rose by 25% YoY to RM22.3 million due to better
18

margin from its Engineering sector.

PBT

1H19 1H20 1H19 1H20 • KKB Engineering contributed RM2.1 million to CMSB’ 1H 2020 share of associates.

MOVING FORWARD
• Despite potentially lower capital expenditure by O&G industry this year, KKB is set to maintain its growth due to its strong order
book of RM880 million which will keep KKB fully occupied for the next two years.
• KKB will continue to benefit from the major on-going infrastructure projects in State such as Pan Borneo Highway and Water
Supply Grid Programme.

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Financial Highlights - Income Statement
REVENUE (RM’mil)

1,741
1,712
817

1,571 489
1,551

2016 2017 2018 2019 1HFY19

1HFY19 1HFY20
1HFY20

PATNCI (RM’mil)

262
208 82
169 159

34

2016 2017 2018 2019 1HFY19 1HFY20

13
Financial Highlights - Segmental Performance
Revenue Contribution by Segment* (%)
7% 11% 8% 8%
10% 6%
23% 33% 29%
29% 30% 31%
35% 29% 24%
28% 27% 26%

35% 32% 32% 34% 34% 39%

FY16 FY17
FY17… FY18 FY19 1HFY19 1HFY20
(Restated)

PBT Contribution by Segment* (%)

8%
20% 27% 20% 16%
28% 14%
9% 7% 40%
9% 15%
25% 23% 23% 7%
35%
32% 15%
17% 18% 26% 13%
34% 28% 23% 26% 25%
21%

FY16 FY17…
FY17 FY18 FY19 1HFY19 1HFY20
(Restated)
Cement Construction Materials & Trading Construction & Road Maintenance Property Development Share of Associates & JVs

14 *after Adjustment & Eliminations

Financial Highlights - Balance Sheet
Total Borrowings and Cash Balance (RM’mil)
978 921 883
803
636 617 621
457 451
248

2016 2017 2018 2019 1HFY20

1HFY20
Total borrowings Cash

Gross & Net Gearing (x)

0.28
0.24 0.25
Net Cash

Net Cash

Net Cash
0.21

0.12
0.10
0.06

2016 2017 2018 2019 1HFY20

(0.08) Gross Gearing Net Gearing
(0.13)

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Response To Covid-19 Pandemic
PROTECTING OUR BUSINESS & PEOPLE WHILE PRESERVING VALUE

1. PRESERVING SHAREHOLDERS’ VALUE

PRESERVING
SHAREHOLDERS VALUE
• Response plans & protocols devised during lockdown led to swift ability
to re-commence operations in mid May during CMCO period.

• Focused on ensuring sustainable long-term growth and shareholder

distributions.

2. PROTECTING OUR WORKFORCE

• Protective measures and working practices adopted for workplace
health & safety.

• Employee welfare prioritised – full remuneration delivered on schedule.

3. ENSURING FINANCIAL RESILIENCE

• Implementing catch-up strategies.
ENSURING PROTECTING OUR
FINANCIAL RESILIENCE WORKFORCE • Enhancing operational efficiency to attain cost savings.

• Cost control efforts including rationalizing capex. Non-essential capex

minimized while essential capex implemented in stages.

• Preserving cash for business operations and future investments.

16
Outlook

CMSB IS WELL POSITIONED TO CAPTURE OPPORTUNITIES IN THE 3 MAJOR

GROWTH AREAS FOR SARAWAK:

SCORE – through OM Sarawak and MPA Sarawak.

Spike in Infrastructure Development in the State – through Cement,

Construction Materials & Trading and Construction & Road Maintenance
Divisions.

Telco-Infrastructure Development – through SACOFA.

17
Sarawak Infrastructure Play

Highways
• Pan Borneo Highway (RM16.5 billion)
• Second Trunk Road (RM6 billion)
• Coastal Roads (RM5 billion)
• Sabah-Sarawak Link Road (RM1.2 billion)

Infrastructure
• Baleh Dam (RM9 billion)
• Water grid programmes (RM2.8 billion)
• Rural electrification projects (RM2.4 billion)
• Telecommunication towers (RM1.0 billion)

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Sustainability & Governance Achievements
SUSTAINABILITY & GOVERNANCE
The only company from Sarawak to be made a
constituent of the FTSE4Good index and one out of 69
companies in Malaysia
Score improved by 21% in FY2019
The only company from Sarawak to qualify as
member of Bursa Malaysia’s Green Lane Policy due
to our good track record of public disclosure
Australasian Reporting Agency
Finalist for ‘Report of the Year Award’ & Gold Award
for 2018 Integrated Annual Report
EMPLOYEE VOLUNTEERISM
2016: 45,534 man-hours 2017: 48,428 man-hours
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AWARDS & RECOGNITION
International Road Federation 2019 Global Road
Achievement Award
Long-term Management and Maintenance of State
Roads in Sarawak
Awarded “BrandLaureate - Conglomerate Award 2019”
at the BrandLaureate World Best Brands Awards 2019
Syed Hizam Alsagoff - Best CFO for Investor Relations
(Mid Cap)
Dato Isaac Lugun and Mr Sahil Singh Dev were
nominated as Best CEO and Best IR Professional
respectively
Ranked as Top 4 employer in Sarawak by JobStreet
CSR Leadership Gold Award
Global CSR Awards, April 2019
2018: 50,421 man-hours 2019: 43,894 man-hours
Creating Future Value
OUR 5-YEAR TARGETS OUR THREE-PRONGED STRATEGY KEY FOUNDATION STONES

• Embed sustainability as a culture in

Grow the Group’s profit 1 Reposition & Fortify all Traditional CMS emphasizing care for the
after tax and non-
Core Businesses customers, environment, employees
controlling interests PATNCI ~RM250m in 5 years and the community.
(PATNCI) to RM500 mil
• Ensure a streamlined, visionary,
unified and engaging leadership.
• Introduce transformational
efficiencies into all businesses
2 Fully implement & Grow Strategic
focusing on innovation, quality, cost
and delivery through the
Businesses
PATNCI ~RM250m in 5 years
employment of digital technology.

Be the most admired • Inculcate the values of integrity,

passion, grit, teamwork and
public-listed company in
accountability.
Sarawak

3 Reposition & Strengthen the CMSB

Brand
Strengthen sustainability practices

20
THANK YOU
Stock Code: 2852
www.cmsb.my

For investor relations enquiries, please contact:

Cahya Mata Sarawak Berhad iBES Advisory Sdn Bhd
investor.relations@cmsb.my ir@ibes-advisory.com