PETALING JAYA: Malayan Cement Bhd
is expected to maintain a steady performance, but RHB Research cautions that margins could come under mild pressure in financial year 2027 (FY27), even as cement prices are expected to hold firm.
RHB Research noted that Newcastle coal prices have risen due to higher crude oil prices, which could increase production costs for cement manufacturers.
Newcastle coal prices rose 2% quarter-to-date to US$$140 per tonne, bringing year-to-date 2026 average prices to US$126 per tonne.
“Based on our estimates, every US$10 per tonne increase in coal prices could reduce earnings by 5% to 6% per annum and lower profit margins by 130 basis points, assuming minimal cost pass-throughs and sustained increase in coal prices,” the research house said.
Notably, RHB Research explained that the impact on Malayan Cement is estimated to be felt from the fourth quarter of FY26 onwards, with low cost coal inventory to last until May this year.
On the bright side, it noted that the group primarily sources coal from Indonesia, where lower calorific value grades translate into cheaper input costs.
The research house also said a potential reversal in Indonesia’s coal output policy could help cushion the impact of elevated coal prices for the group.
“More recently, the Indonesian government announced plans to raise coal output in 2026, reversing an earlier decision to curb output by 24% year-on-year, to capitalise on rising coal prices.”
According to the research house, this will keep Indonesia’s coal situation in a structural oversupply.
Meanwhile, rebates have declined to RM20 per tonne from RM70 a year ago, although the company’s management is still monitoring baseline average selling prices.
“We estimate that every RM10 reduction in rebates could lift earnings by around 8% annually,” it explained.
