PETALING JAYA: YTL Corp Bhd
subsidiary Malayan Cement Bhd expects cement demand to hold up in the financial year ending June 30, 2027 (FY27) amid higher coal prices.
MBSB Research sees demand holding up in the first quarter of FY27 (1Q27) despite the higher coal costs, as it said management has shared that cement volumes remained healthy in the July-to-September period.
It said ready-mixed concrete could see further upside from the current RM325 per tonne.
“On costs, coal procured at US$80 to US$90 per tonne, up from US$70/tonne previously, partly reflects the rebound in Indonesian coal prices following tighter production quotas.
“The higher costs should flow through into FY27, though Malayan Cement’s rolling two to three-month procurement strategy should keep the impact manageable,” it said.
The research house has maintained a “buy” call but revised the target price (TP) to RM9.53 from RM10 to reflect potential margin compression from rising coal costs.
However, it has raised the FY27 and FY28 earnings estimates by 3% for both periods on the back of the higher FY26 earnings base. “Malayan Cement remains one of our top picks within the construction sector, given its position as a key beneficiary of the construction upcycle.
“Demand is expected to be supported by a strong pipeline of civil and private projects, including warehouses, data centres, and residential developments, while the anticipated mass rapid transit three rollout offers a multi-year catalyst,” it said.
“Additionally, the Johor-Singapore Special Economic Zone is poised to unlock new growth opportunities, particularly for supporting industries.
“On the civil front, projects such as the Penang light rail transit and airport expansions, alongside infrastructure initiatives under Budget 2026 and the 13th Malaysia Plan including roads, schools, and hospitals should sustain robust demand momentum,” it added.
RHB Research has also maintained a “buy” call on the stock with an unchanged TP of RM8.20 with no changes to earnings projections as it has accounted for higher coals costs in FY27 and FY28.
Based on its estimates, every US$10/tonne increase in coal prices could reduce earnings by 5% to 6% and lower earnings before interest and tax (Ebit) by 130 basis points, assuming minimal cost pass-through and a sustained increase in coal prices.
The brokerage has remained largely positive on the company’s cost control initiatives, which has been reflected in Ebit margins improving to 285 from 25% a year ago. The company has also shared that it remains optimistic on 1Q27 sales volume on a quarter-on-quarter basis, while average selling prices should remain largely similar year-on-year.
