MCEMENT major input cost fot manufactue cement is coal.
Import coal price is in USD. Selling finished priduct, cement is in RM.
USD have weaken by 9% since Jun from RM 4.72 to RM 4.33 now. The lower feedcost via currency weakness alone will boost Mcement profit significantly as cement selling price remain elevated unchanged.
Upcoming MRT3, Penang LRT, Johor BRT, HSR, booming Data center and China +1 semiconductor industry all will increase cement demand forward.
If check MCEMENT latest Q result, it cost of sale have decrease significantly, boosting it's Pretax profit margin to 40% from 30%. However, net profit increase only smaller due to one off impairment RM 131m. Stripping out the impairment, MCEMENT EPS in actual can deliver 16sen instead of 8sen.
Next coming Q result will be very interesting, if revenue sustain at current level, profit margin will further increase from current 40% to up to 45% due to significant 9% weaken USD cost currency on import cost coal. Next EPS could range 18sen-20sen
Mcement debt level have trim down significantly due to strong cash flow generated RM 1.2 billion yearly. Mcement balance sheet will like turn net cash position in 1-2 year time. Higher dividend is expected
@hng33, you really had a good spot here again after winning big in PBA. Indeed a sifu in stock picking!
MCement latest Q4 result shows that its debt level has reduced by RM600 million in a year, due to its super strong cash flows of RM930 million in FY2024.
Q4 net profit would have been much higher if not for an impairment of RM137m recognised in the quarter for plant and machinery at Rawang plant. Pretax profit would have been at RM281 million without the impairment and net profit about RM215 million or EPS of 16.2 sen.
Without the impairment, EPS would have been 16 sen a quarter, annualised to 64 sen for FY2025. At a conservative PER of 10x, MCement should be worth at least RM6.00.
Based on its operating cashflows of RM930 million a year, MCement would be valued at RM13.3 billion at 7% FCF yield, or RM9.90 per share as what I had initially projected back in 2022.
As YTL owns some 73% stake in MCement, the surging profits at MCement will help to propel YTL earnings up in next few years and to push YTL share price to double up also by 2028.
Dragon328 Yes, if without ome off impairments incur in Q4, it EPS will be 16sen.
Based on current strength in RM against import feedstock, coal at USD cost and stabilise ongoing coal selling price, Mcement is expect deliver even better next Q profit forward.
Upcoming MRT3, Penang LRT, JB BRT, HSR and more exposure in SARAWAK market aftet secure state gov import permit to expand cement market share to west Malaysia, Mcement also now is direct proxy to SARAWAK construction activities and may through SARAWAK also penetrate to kalimatam, new Nusatara capital
Dragon If compared between YTL and Mcement, i still prefer Mcement for its direct exposure instead of conglomerate which often need to trade at discount level.
Market also have will give premium valuation to Mcement given fact that it is largest cement marker in Malaysia, control more than 60% whcih if including new market in SARAWAK, Mecemnt market share should even higher.
But YTL is still cheap as a construction stock, if not seen as a conglomerate. YTL will be the key beneficial for the upcoming mega projects like MRT3 and HSR as one of the front runners to win the projects as a contractor.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
hng33
20,465 posts
Posted by hng33 > 1 month ago | Report Abuse
MCEMENT major input cost fot manufactue cement is coal.
Import coal price is in USD. Selling finished priduct, cement is in RM.
USD have weaken by 9% since Jun from RM 4.72 to RM 4.33 now. The lower feedcost via currency weakness alone will boost Mcement profit significantly as cement selling price remain elevated unchanged.
Upcoming MRT3, Penang LRT, Johor BRT, HSR, booming Data center and China +1 semiconductor industry all will increase cement demand forward.