Malayan Cement stocked up against coal supply disruptions
KUALA LUMPUR: Malayan Cement Bhd is well-positioned to weather potential coal supply disruptions from Indonesia, having secured sufficient stocks until November, according to CIMB Securities Sdn Bhd.
KUALA LUMPUR: Malayan Cement has secured ample coal stocks until November, ensuring resilience against potential disruptions, according to CIMB Securities Sdn Bhd. The cement maker's shares experienced selling pressure since mid-August due to concerns over coal supply and Middle East tensions. Recent Indonesian coal prices for low- and medium-grade coal showed slight decreases in early September compared to the second half of August.
CIMB Securities believes that any price gains may be limited by reduced demand from China and India, traditional top buyers, as these markets diversify their sources. Malayan Cement aims to boost efficiency and incorporate alternative fuels to control production costs. The company's current coal price forecast of US$90 per tonne for FY27 and FY28 is higher than the spot price of US$83 per tonne for Indonesian medium-grade coal as of September 4.
CIMB Securities forecasts that domestic cement prices will stay stable. In the first half of 2026, domestic bag cement prices ranged from RM25.30 to RM25.95 per bag, with no significant fluctuations expected. CIMB Securities recommends buying Malayan Cement with a target price of RM8.50, noting the stock's attractive risk-reward profile at 12 times and 11 times its projected earnings for FY27 and FY28, respectively.
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