PETALING JAYA: Malayan Cement Bhd
’s risk-reward profile remains attractive despite higher coal price assumptions and a delay in the expected timing of domestic cement price revisions, according to CIMB Research.
The research house, however, trimmed its core earnings forecasts for the financial year ending 2027 (FY27) and FY28 by 11% and 5%, respectively, mainly due to a higher coal price assumption of US$90 per tonne.
It also took into account a deferral of the projected timeline for coal price revisions to FY28, and revised ringgit-dollar assumptions.
CIMB Research, which maintained a “buy” call on the stock, has lowered its target price by 6% to RM8.50 from RM9.05, based on 16 times 2027 core earnings per share.
It added that the revised target price still reflects Malayan Cement’s demonstrated pricing power in response to input cost volatility.
Despite the earnings cuts, the research house believes the stock offers an attractive entry point, trading at 0.7 standard deviation below its 2022 to 2026 five-year mean price-to-earnings ratio, even as operating fundamentals remain resilient.
One key positive is demand visibility from downstream units under YTL Cement Bhd.
CIMB Research highlighted that 81%-owned Eastern Pretech (Malaysia) Sdn Bhd secured significant precast projects in Malaysia and Singapore on July 10, which it said should provide a positive read-through for Malayan Cement.
In Malaysia, Eastern Pretech secured two contracts to supply a total of 117,000 precast concrete sleepers for the Klang Valley Double Track and East Coast Rail Link projects.
In Singapore, it will supply 19,430 cu m of precast concrete elements for a S$1bil integrated development in Toa Payoh.
CIMB Research expects these projects to open alternative demand channels for Malayan Cement’s cement and ready-mixed concrete businesses, providing support beyond conventional construction demand.
Meanwhile, developments in Indonesia could keep coal prices elevated.
CIMB Research noted Indonesia’s move to accelerate the rollout of an integrated governance system for commodity export data and plans to launch a Strategic Minerals and Commodity Exchange from January 2027.
Furthermore, the changes could strengthen Indonesia’s influence over coal exports and pricing.
For FY26, CIMB Research forecasts revenue of RM4.91bil and core net profit of RM880mil.
Core earnings for Malayan Cement are expected to ease 5% to RM834mil in FY27, before recovering 13.1% to RM950mil in FY28. The dividend per share is projected to rise from 14 sen in FY26 to 20 sen in FY28.
CIMB Research reiterated a RM8.50 target price and “buy” recommendation, saying the recent share price pullback presents an attractive entry point into the domestic cement market leader.
