PETALING JAYA: Hume Cement Industries Bhd
’s net cash position is set to rise to about 15% of its current market capitalisation following the disposal of its loss-making concrete business.
The concrete division, which contributed 5.6% of the cement manufacturer’s revenue in the financial year ended June 30, 2025 (FY25), is being sold to YTL Corp Bhd for RM215mil.
Announced last month, the proposed disposal forms part of Hume’s strategy to divest non-core assets, sharpen operational focus and reallocate capital towards its core cement operations.
UOB Kay Hian (UOBKH) Research said the disposal is expected to generate “an estimated one-off disposal gain of RM185.7mil, including redemption of redeemable convertible unsecured loan stocks amounting to RM42.5mil”.
The research house noted that Hume’s current cash position stands at about 6% of its market capitalisation as at the first quarter of FY26. Based on yesterday’s share price of RM3.50, the group’s market cap was RM2.54bil.
Subject to shareholder approval, the transaction is expected to be completed in the second quarter of 2026, placing Hume in a stronger financial position at a time when many industry peers continue to operate with net debt.
“As such, we anticipate an improvement in dividend payouts from the third quarter of FY26, in line with the company’s historical distribution pattern in the first quarter and third quarter.
“We have raised our dividend payout assumption for FY26 to FY28 from 40% to 50%, which brings FY26 dividend per share to 15 sen, translating into a net dividend yield of 4.3%,” UOBKH Research said.
The research firm maintained its “buy” call on Hume with a target price of RM4.51.
On operations, UOBKH Research noted that stricter enforcement against overloaded commercial trucks has led to an immediate rise in distribution costs for both bagged and bulk cement.
“To mitigate the impact, Hume implemented a 13% to 15% price increase in November 2025. While this may not fully offset higher distribution costs and could result in delivery delays due to limited truck availability, we do not rule out another round of price hikes, driven by a shortage of trucks amid robust cement demand in West Malaysia.”
However, it believes management can mitigate these challenges through more efficient truck utilisation and higher turnover rates.
On the potential relaxation of cement import requirements, UOBKH Research said the impact is likely to be minimal.
Earlier this month, the government signalled the possibility of easing import rules to keep construction material costs low.
