KUALA LUMPUR (May 22): Malayan Cement Bhd (KL:MCEMENT) is likely to report softer results for the recently-ended quarter, dragged by higher coal prices, said RHB Research.

Net profit at the cement producer may decline up to 15% quarter-on-quarter for the three months ended March 31, 2026 (3QFY2026) from margin pressures, according to RHB Research’s earnings preview. Malayan Cement is due to announce its results on May 25.

“We expect Malayan Cement’s 3QFY2026 net profit to remain stable, supported by higher cement production, although offset by higher coal prices,” the house said.

Prices of coal have soared amid a scramble to secure supply for power plants and other heavy industries as geopolitical conflict in the Middle East disrupted the global flow of oil and gas.

Coal, used to fire up Malayan Cement’s kilns to convert raw materials into clinker, the foundational ingredient of cement, makes up 20%-30% of its production costs. Coal prices per tonne traded in Rotterdam and Newcastle have risen 12%-15% quarter-on-quarter to US$110-US$120.

Every US$10 per tonne increase in coal prices could reduce Malayan Cement’s annual earnings by 5%-6% and lower profit before interest and tax margins by 130 basis points with minimal cost pass-through and sustained coal prices, according to RHB Research’s estimates.

Overall, however, Malayan Cement is still a ‘buy’ ahead of the results, RHB Research said and kept its target price at RM9.80, noting that its valuation remains compelling, trading at 10 times forward earnings, lower than its historical average of 13 times.

All six analysts tracked by Bloomberg are unanimously bullish on the stock, with an average target 12-month target price of RM9.40, implying potential gain of up to 38% from the last price of RM6.82.