KEY INVESTMENT HIGHLIGHTS

• 4QFY24 core net profit rose +65.0%yoy to RM135.2m; FY24 core net profit tripled to RM500.1m, exceeding expectations
• Cement FY24 operating profit doubled to RM761.4m; concrete division grew +7.9% to RM40.4m
• FY25 demand to continue being driven by private sector with industrial projects such as warehouses and DCs
• Maintain BUY with an upgraded TP of RM6.60

Exceed expectations. Malayan Cement achieved a +65.0%yoy increase in its 4QFY24 core net profit to RM135.2m, ending FY24 on a strong note with a core net profit that tripled to RM500.1m. This exceeded our FY24 estimates by 21.9% and the consensus by 11.4%, attributable to stronger performances in both cement and ready-mixed concrete.

Cement segment. While cement saw a decline in revenue during the quarter by -6.6%qoq to RM771.5m on the back of softer demand and slower production, the cumulative 12 months recorded a +16.7% increase to RM3.36b while operating profit doubled to RM761.4m. This was attributable to stabilisation in selling prices and moderation in coal prices.

Aggregates & concrete segment. The segment's revenue also inched lower by -1.1%qoq to RM269.9m but the cumulative FY24 saw a +23.7% increase to RM1.09b. Operating profit grew +7.9% to RM40.4m.

Private sector to continue driving demand. Like FY24, management expects FY25F demand to continue being driven by the private sector, with projects such as warehouses, data centres and residential projects. On the civil side, we expect projects such as the Penang LRT, airport expansions and other projects under Budget 2024 such as roads, schools and hospitals to drive demand.

Earnings estimates. We are lifting our FY25F/FY26F core net profit by +9.4%/+5.3% to RM468.6m/RM482.7m to reflect the stronger performance and the improving prospects of the construction sector which should sustain demand in the coming years.

Target price. We are upgrading our TP to RM6.60 from RM6.03 previously as we peg the group's revised FY25F EPS of 25.3 sen to its two-year mean PER of 26x.

Maintain BUY. Malayan Cement is among the main direct beneficiaries of the pickup in the construction sector, which is expected to be driven by a strong pipeline of jobs, both civil and private. Apart from the growth in private projects such as data centres, warehouses and semiconductor factories, the expected rollout of civil jobs starting 2HCY24 is expected to drive the demand for cement and ready-mixed concrete moving forward. All factors considered; we reiterate our BUY recommendation on Malayan Cement.

Source: MIDF Research - 22 Aug 2024