MCement to ride on dominant industry position

By the Editorial Team · Friday, September 18, 2026

CGS International has cut Malayan Cement’s earnings per share forecasts by 25% annually for fiscal years 2027 to 2029 due to dilution from newly issued convertible preference shares. Despite this, the firm kept an “add” rating, noting the company’s strong market position and attractive valuation, while pointing to risks from property market slowdown and infrastructure delays.

CGS International (CGSI) Research has revised down its earnings per share (EPS) forecasts for Malayan Cement Bhd (MCement) for the financial years ending June 30, 2027, through 2029, reducing estimates by 25% annually. The adjustment reflects the full dilution impact from an additional 466.7 million irredeemable convertible preference shares (ICPS) issued by the company.

Despite the dilution, CGSI maintained an “add” rating on MCement, citing its leading market share within Malaysia's cement industry and steadily increasing export volumes. The research firm noted that the stock remains attractively valued at about 10 times projected price-to-earnings for fiscal year 2028, even after the EPS adjustments, lowering the target price to RM8 per share. MCement’s share price was last recorded at RM5.37.

The research group highlighted several risks that could weigh on the stock, including a potential slowdown in property demand and delays in significant infrastructure projects. Conversely, catalysts that could drive a re-rating of the stock include a more rapid than anticipated rollout of major developments and stronger property sales.

Rising oil prices have shifted investor focus toward cost pressures, particularly concerning coal, a key input for MCement. Nevertheless, CGSI indicated that coal prices at the required calorific values remain below their forecasts for FY27 to FY29, with no supply disruptions expected. The firm added that MCement enjoys pricing advantages over peers due to its substantial purchasing volumes. While diesel costs have limited impact on cement production, transportation expenses vary by product type: costs for bulk and bagged cement shipping are subsidized, whereas ready-mixed concrete (RMC) transport is not.

MCement’s RMC segment, however, benefits from pricing power supported by robust demand. CGSI suggested that the company’s industry dominance and fully integrated operations may allow it to offset increased costs through narrower rebates if demand holds steady. According to management statements and independent checks with contractors, the average selling prices for cement and RMC have remained stable, with some market participants anticipating potential price increases should regional conflict persist.

On the operational front, MCement is preparing for the upcoming monsoon season by building coal inventories. The group continues to expand its fuel mix by adopting alternative energy sources such as biomass, local plastics, and treated refinery waste. Capital investments in certain plants have also enabled the use of coal with lower calorific values, contributing to cost efficiency.

The ICPS issuance relates to part of the RM5.2 billion payment for the 2019 acquisition of YTL Cement, an unlisted entity, along with its concrete business. The acquisition consideration included RM2 billion in cash, RM1.4 billion in 375.5 million new ordinary shares, and RM1.75 billion in 466.7 million ICPS.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.