Companies in building material sector deliver improved earnings

Kenanga Research said stocks under its coverage had either beat or met forecasts.

PETALING JAYA: Companies operating in the building material sector reported a significant improvement in earnings in the recently concluded first quarter 2024 (1Q24) reporting season, according to Kenanga Research.

The research house pointed out that stocks under its coverage had either beat or met forecasts.

Press Metal Aluminium Holdings Bhd beat our forecast driven by higher-than expected average selling price and stronger-than-expected performance from associate PT Bintan, while Engtex Group Bhd and United U-Li Corp Bhd met our expectations as they shook off margin suppression from high-cost inventories.”

Kenanga Research expects aluminium prices to stay firm on supply constraints following the closure of fossil fuel-powered smelters due to rising environmental awareness and Western sanctions against Russian aluminium producers.

“Aluminium prices have been on an uptrend since the beginning of the year on surprisingly strong consumption in China, while outside of China, the demand has been spurred by renewable energy projects and the electric vehicle production.

“Sustainable demand in China will depend on a revival of infrastructure and property projects of which the outlook is still uncertain.”

As for steel, it said prices have remained stable. This will translate to stable steel product prices, reducing earnings volatility of product producers.

Meanwhile, it said water pipe makers are poised for exciting times ahead on the revival of water projects.

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