Malayan Cement's Outlook Mirrors Sectors' Robust Performance
Malayan Cement Bhd remains a top pick among analysts with unanimous BUY calls from RHB Investment Bank Bhd (RHB Research), MIDF Amanah Investment Bank Bhd (MIDF Research), CIMB Investment Bank Bhd (CIMB Securities) and Hong Leong Investment Bank Bhd (HLIB), each highlighting strong earnings performance and robust outlook amid a recovering construction sector. Target prices range from RM6.35 to RM7.49, signalling potential upside from the current RM4.85 market price.
RHB Research maintained its BUY rating with a target price of RM6.71, citing 3QFY25 core earnings of RM183 million that surpassed expectations by 86-93%. The bank highlighted improved operational efficiencies, lower production costs and higher average selling prices (ASPs) in ready-mixed concrete as key profit drivers despite a slight dip in cement volume.
The house noted that the company's net margin improved to 16.7% from 13.9% in the prior quarter and expects margins to remain strong with stable ASPs and easing coal prices. RHB raised its earnings forecasts for FY25-27 by over 12%, while trimming the target price earnings ratio to 14x to reflect a more moderate growth outlook. The bank flagged risks such as raw material cost inflation and a broader economic slowdown.
MIDF Research also reiterated the call, boosted by an upward revision of FY26 earnings per share to 31.2 sen, pegged to a three-year mean price-earnings ratio of 24x. MIDF Research highlighted a strong 9MFY25 core net profit growth of 32.5% year-on-year, supported by gains in the concrete business and a healthy pipeline of civil and private sector projects including warehouses, data centres and the Johor-Singapore Special Economic Zone (SEZ). The bank pointed to the 3QFY25 operating profit surge in the aggregates and concrete segment, driven by a 20% increase in ready-mixed concrete sales volume primarily from industrial and commercial demand.
CIMB Securities upgraded its target price slightly to RM6.35 following a 9MFY25 core profit of RM478 million that exceeded prior forecasts by 25%. The bank emphasised strong growth in the ready-mixed concrete division, which saw a 4.3 times increase in EBIT margins alongside 28% revenue growth.
CIMB Securities noted that lower depreciation charges and finance costs also supported results. The house views Malayan Cement as well-positioned to benefit from upcoming infrastructure projects such as the Penang Light Rail Transit and Johor Automated Rapid Transit, particularly if parent company YTL Corp wins major tenders. The group's healthy net gearing of 31% and strong operating cash flows were cited as further strengths.
HLIB retained its recommendation, highlighting 9MFY25 core PATAMI of RM490.3 million, surpassing both their and consensus full-year forecasts. The bank attributed earnings growth to operational efficiencies, stable ASPs and demand from high-grade ready-mixed concrete products used in data centres and industrial buildings.
The research house pointed to sustained demand from key projects including the Johor Bahru-Singapore SEZ and Penang LRT, alongside cost discipline and lower borrowing costs as key positives. Despite a modest 5% quarter-on-quarter revenue decline, improved margins and reduced depreciation charges drove a 10.6% rise in core quarterly profit. HLIB projects a dividend yield of 4.0% and total expected return exceeding 57%.
Across the board, analysts agree Malayan Cement is benefitting from a structural shift in the construction sector, with a rising contribution from ready-mixed concrete, operational cost improvements and a healthy project pipeline underpinning robust profit growth. While challenges from raw material inflation and economic uncertainties remain, the company's dominant market position and strategic initiatives support an optimistic medium-term outlook. Related
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Sun
9 hours ago
- The Sun
MIDF Research: Oil prices under pressure as supply outpaces demand
KUALA LUMPUR: Crude oil prices are expected to remain under pressure and could fall below US$65 per barrel (pb) due to persistent oversupply and weaker demand projections, according to MIDF Amanah Investment Bank Bhd (MIDF Research). However, MIDF Research noted that prices may stabilise over the longer term, even as inventories continue to rise. Sentiment surrounding trade policy developments between the United States (US) and China remains a significant risk to market movements, it said in a note today. 'Natural gas and liquified natural gas (LNG) are expected to see a rebound after May 2025's maintenance round concluded for most of the global gas and LNG facilities. 'Nevertheless, the downside risks to the lower oil price remain on new exploration projects, but may be beneficial for onshore storage, long-term tankers and retail fuel,' it said. MIDF Research opines that the scenarios of the global oil market and global economy will continue to keep Brent crude oil price within the US$60-65 pb range, averaging around US$62 pb in June 2025. 'This lower expectation is considering the risks of post-US trade tariff pause, as well as the stockpiling of oil inventories in the near term,' said MIDF Research. Meanwhile, the investment bank said ASEAN collaborations have offered a brighter outlook for the oil and gas (O&G) sector. MIDF Research stated that Petroliam Nasional Bhd (Petronas) is continuing its aggressive exploration and production (E&P) activities in the upstream sector, despite lower crude oil prices. Meanwhile, the midstream and downstream divisions are expected to turn towards sustainability and green energy solutions, integrating these initiatives into their operations. 'During the ASEAN summit that concluded in May 2025, the transportation and logistics of LNG and carbon capture and storage (CCS) were highlighted as strategic priorities for the region. 'More focus was set on renewable energy and hydrogen projects to be integrated with the conventional O&G developments, providing a balanced and sound energy transition as highlighted in Malaysia's National Energy Transition Roadmap (NETR),' it noted. MIDF Research added that regional cooperation is likely to expand through energy security, carbon credit management, Environmental Corporation America (ECA) compliance and CCS solutions. 'In addition, we opine that domestic demand and robust LNG exports will continue to locally support the sector. 'Overall, we retain a 'Neutral' view on the O&G sector, as it continues to face challenges, primarily from oil price volatility, driven by output hikes from the Organisation of the Petroleum Exporting Countries plus (OPEC+) and non-OPEC producers, including sluggish global demand due to tariff-related uncertainties,' it added.
The Sun
9 hours ago
- The Sun
Oil prices may dip below $65 amid weak demand, oversupply
KUALA LUMPUR: Crude oil prices are expected to remain under pressure and could fall below US$65 per barrel (pb) due to persistent oversupply and weaker demand projections, according to MIDF Amanah Investment Bank Bhd (MIDF Research). However, MIDF Research noted that prices may stabilise over the longer term, even as inventories continue to rise. Sentiment surrounding trade policy developments between the United States (US) and China remains a significant risk to market movements, it said in a note today. 'Natural gas and liquified natural gas (LNG) are expected to see a rebound after May 2025's maintenance round concluded for most of the global gas and LNG facilities. 'Nevertheless, the downside risks to the lower oil price remain on new exploration projects, but may be beneficial for onshore storage, long-term tankers and retail fuel,' it said. MIDF Research opines that the scenarios of the global oil market and global economy will continue to keep Brent crude oil price within the US$60-65 pb range, averaging around US$62 pb in June 2025. 'This lower expectation is considering the risks of post-US trade tariff pause, as well as the stockpiling of oil inventories in the near term,' said MIDF Research. Meanwhile, the investment bank said ASEAN collaborations have offered a brighter outlook for the oil and gas (O&G) sector. MIDF Research stated that Petroliam Nasional Bhd (Petronas) is continuing its aggressive exploration and production (E&P) activities in the upstream sector, despite lower crude oil prices. Meanwhile, the midstream and downstream divisions are expected to turn towards sustainability and green energy solutions, integrating these initiatives into their operations. 'During the ASEAN summit that concluded in May 2025, the transportation and logistics of LNG and carbon capture and storage (CCS) were highlighted as strategic priorities for the region. 'More focus was set on renewable energy and hydrogen projects to be integrated with the conventional O&G developments, providing a balanced and sound energy transition as highlighted in Malaysia's National Energy Transition Roadmap (NETR),' it noted. MIDF Research added that regional cooperation is likely to expand through energy security, carbon credit management, Environmental Corporation America (ECA) compliance and CCS solutions. 'In addition, we opine that domestic demand and robust LNG exports will continue to locally support the sector. 'Overall, we retain a 'Neutral' view on the O&G sector, as it continues to face challenges, primarily from oil price volatility, driven by output hikes from the Organisation of the Petroleum Exporting Countries plus (OPEC+) and non-OPEC producers, including sluggish global demand due to tariff-related uncertainties,' it added.
Malay Mail
9 hours ago
- Malay Mail
MIDF Research: Oil prices under pressure as supply outpaces demand
KUALA LUMPUR, June 6 — Crude oil prices are expected to remain under pressure and could fall below US$65 per barrel (pb) due to persistent oversupply and weaker demand projections, according to MIDF Amanah Investment Bank Bhd (MIDF Research). However, MIDF Research noted that prices may stabilise over the longer term, even as inventories continue to rise. Sentiment surrounding trade policy developments between the United States (US) and China remains a significant risk to market movements, it said in a note today. 'Natural gas and liquified natural gas (LNG) are expected to see a rebound after May 2025's maintenance round concluded for most of the global gas and LNG facilities. 'Nevertheless, the downside risks to the lower oil price remain on new exploration projects, but may be beneficial for onshore storage, long-term tankers and retail fuel,' it said. MIDF Research opines that the scenarios of the global oil market and global economy will continue to keep Brent crude oil price within the US$60-65 pb range, averaging around US$62 pb in June 2025. 'This lower expectation is considering the risks of post-US trade tariff pause, as well as the stockpiling of oil inventories in the near term,' said MIDF Research. Meanwhile, the investment bank said Asean collaborations have offered a brighter outlook for the oil and gas (O&G) sector. MIDF Research stated that Petroliam Nasional Bhd (Petronas) is continuing its aggressive exploration and production (E&P) activities in the upstream sector, despite lower crude oil prices. Meanwhile, the midstream and downstream divisions are expected to turn towards sustainability and green energy solutions, integrating these initiatives into their operations. 'During the Asean summit that concluded in May 2025, the transportation and logistics of LNG and carbon capture and storage (CCS) were highlighted as strategic priorities for the region. 'More focus was set on renewable energy and hydrogen projects to be integrated with the conventional O&G developments, providing a balanced and sound energy transition as highlighted in Malaysia's National Energy Transition Roadmap (NETR),' it noted. MIDF Research added that regional cooperation is likely to expand through energy security, carbon credit management, Environmental Corporation America (ECA) compliance and CCS solutions. 'In addition, we opine that domestic demand and robust LNG exports will continue to locally support the sector. 'Overall, we retain a 'Neutral' view on the O&G sector, as it continues to face challenges, primarily from oil price volatility, driven by output hikes from the Organisation of the Petroleum Exporting Countries plus (OPEC+) and non-OPEC producers, including sluggish global demand due to tariff-related uncertainties,' it added. — Bernama
