PETALING JAYA: The recent selldown of Malayan Cement Bhd
’s shares due to investor concerns over weather-related disruptions to major coal barging routes in Indonesia, as well as renewed tensions in the Middle East, may be overblown, says CIMB Research.
It believes the knock-on impact from coal supply dislocations in Indonesia remains manageable for the company, as it has secured coal stockpiles up until November 2026.
The concerns over coal supply followed a local media report that coal shipments from central Kalimantan faced growing disruptions due to navigation issues on the upper Barito River stemming from a strong El Nino phenomenon.
It noted that relative to the second half of August, the latest Indonesian coal benchmark prices for low-and medium-grade coal released for the first half of September 2026 actually softened half-on-half by 1.1% and 1.9%, respectively.
“We are of the opinion that any price gains will likely be capped by softer demand from China and India, traditionally the top two buyers of Indonesian coal, as these markets are diversifying their sourcing by importing from other markets (for example, Russia, South Africa, and Australia),” it added.
To optimise production costs, it noted that the company has been improving its operating efficiency and the use of alternative fuels and materials.
Its projected coal price assumption of US$90 per tonne for 2027 and 2028 remains higher than the spot price of US$83 per tonne for the medium-grade 4,800 kcal Indonesian benchmark as of Sept 4, 2026.
It noted that over the first seven months of 2026, domestic bag cement prices hovered within a narrow band of RM25.30 to RM25.95 per bag, which aligns with the latest feedback from construction and property businesses who do not expect any big price swings for the rest of the year provided oil prices remain stable.
The research house has maintained a “buy” recommendation on the stock with a target price of RM8.50, pointing out that the recent sharp retracement in the share price has made it increasingly attractive on a risk-reward basis.
