KUALA LUMPUR (Aug 15): CGS-CIMB Securities said it believes Malayan Cement Bhd is a key beneficiary of the KL-Singapore high speed rail (HSR) and Mass Rapid Transit 3 (MRT3) projects.

In a note on Monday (Aug 14), the research house has maintained its “add” rating on Malayan Cement at RM3.25 with a higher target price of RM5.55 (from RM5.08) and raised the company’s earnings per share by 4% for the financial year 2023 (FY2023), by 32% for FY2024 and by 29% for FY2025.

CGS-CIMB said cement industry's prospects will look brighter post the fourth quarter of calendar year 2023 once there is clarity on the MRT3, Bayan Lepas Light Rail Transit and HSR, which have a combined value of circa RM90 billion.

“Assuming cement accounts for 5% of total construction cost, we estimate this could result in additional demand of RM4.5 billion over the next five to six years.

“We believe the company is a key beneficiary of HSR and MRT3 regardless of YTL’s involvement,” it said.

The research house added that it expects the release of Malayan Cement’s fourth quarter of FY2023 results to trigger earnings upgrades and for consensus earnings to be more in line with house projections, thus serving as a re-rating catalyst.

YTL (4677