CIMB Investment Bank Bhd (CIMB Securities) gives a BUY call (from HOLD) with a lower target price of RM8.25 from RM8.50 as value is seen emerging in Malayan Cement following a recent share price pullback of 22% since late February, while easing concerns over Indonesia’s coal supply restrictions are expected to support cost stability for cement producers.
According to CIMB Securities, Indonesia is now planning to raise coal output in 2026, reversing earlier proposals to cap production at around 600 million tonnes versus 790 million tonnes in 2025.
The analysts noted that the shift reduces fears of a severe coal feedstock shortage, particularly for regional cement players that rely on Indonesia as a key import source.
The brokerage added that while Indonesia is considering export duties and a windfall tax on coal to manage subsidies, domestic demand will still be prioritised.
This is expected to help stabilise supply conditions for industrial users such as cement manufacturers even as energy markets remain volatile due to global geopolitical tensions.
On Malayan Cement’s earnings outlook, CIMB Securities trimmed its FY26 to FY28 forecasts by 3%, 6% and 4% respectively, citing higher coal and electricity costs as well as foreign exchange assumptions. Coal and power are expected to account for about 49% to 50% of net operating costs over the period.
The analysts also highlighted that parent company YTL Cement has been actively expanding downstream exposure through acquisitions including stakes in NSL Ltd, SCIB’s concrete arm and Hume Cement’s concrete business, alongside a takeover offer for Concrete Engineering Products.
Despite near-term cost pressures, CIMB Securities maintained that valuation has become more attractive at 17 times FY27 earnings, supporting the upgrade to Buy.
The firm said downside risks remain tied to prolonged geopolitical tensions and potential supply chain disruptions.
As of 12.35 pm, the stock price increased 5.40% to RM7.03.
