KUALA LUMPUR (March 16): Malayan Cement Bhd (KL:MCEMENT) rebounded on Monday to snap a three-day losing streak as RHB Research flagged positive margin outlook amid cost pressures.   

Surging coal prices from the Middle East conflicts could be cushioned in the near term by current inventory, the research house said. Malayan Cement could also pass on some of the higher costs to customers, given its status as the largest producer, the house noted.

“Despite lingering uncertainties due to geopolitical tensions, we view the recent sell-off in Malayan Cement as an opportunity to accumulate,” RHB Research said.

Malayan Cement rose as much as 58 sen, or over 9%, to RM6.73 on Monday. The stock was trading at RM6.70 at 9.15am, after more than one million shares changed hands.  

Shares of Malayan Cement have lost some 28% of their value since the outbreak of the Iran war, a decline that erased more than RM7 billion from its market capitalisation. On Friday (March 13) alone, the stock was down 18%.

Investors’ sentiment has been hit by surging prices of coal that largely tracks that of crude oil. Benchmark prices of coal, which accounts for 20%-30% of Malayan Cement’s total costs, have risen by 21%-29% in one week alone.

With minimal cost pass-through, every US$10 increase in coal prices could reduce Malayan Cement’s earnings by about RM50 million and shave up to 6% off the earnings for the 12 months ending June 2027, according to RHB Research’s analysis.

“Further near-term correction cannot be ruled out if market fears persist,” the research house cautioned.

For now, however, Malayan Cement’s valuations are compelling, RHB Research said, adding that the house remains positive on the stock “given its improving margins and operational efficiencies”.