Malayan Cement Berhad (MCement) closed FY6/24 on a robust note, with a notable 4QFY24 core net profit of RM134 million, marking a 68% year-on-year increase. The strong earnings helped push the full-year core net profit to RM446 million, more than doubling from the previous year and exceeding expectations. The company declared a second interim dividend of 6 sen, contributing to a total FY24 dividend of 10 sen, reflecting its strong free cash flow.

In light of these results, analysts have maintained a positive outlook. The recommendations aree to Add or BUY, with a revised target price of RM6.90, reflecting a 2% increase in FY26 EPS estimates. This adjustment is based on expected growth from new infrastructure projects and the revival of the property market, which is anticipated to offset the ending of the ECRL cement supply contract by the end of CY24. Analysts have highlighted that while the ECRL project concludes, upcoming projects like the Penang LRT and Johor ART, along with potential developments like the KL-SG HSR, are expected to drive future demand.

The company's revenue for FY24 increased by 18% year-on-year to RM4.4 billion, although 4QFY24 revenue saw a 5% decline quarter-on-quarter to RM1 billion due to lower sales volume. Despite this, the average selling prices (ASPs) for both domestic cement and ready-mixed concrete remained stable. The decline in 4QFY24 revenue was attributed to lower sales volumes, though ASPs held firm.

Looking ahead, MCement is poised to benefit from a strong construction pipeline and rising data centre demand. With a stable RM against the US dollar, the company is expected to see favourable conditions for its cost structure, especially since a significant portion of its cost of goods sold (COGS) is coal priced in USD. Although higher diesel prices may impact transportation costs, these could be mitigated by stable price rebates and higher ready-mixed concrete prices. Additionally, the company's recent acquisition of a stake in NSL Ltd is anticipated to enhance its cement market share in Singapore and further bolster its position in the regional market.