With a 40% market share in the Malaysian cement industry, Inter-Pacific Securities expects Lafarge Malayan Cement Bhd (LMC) to benefit from economic activities generated by the government’s pump-priming efforts.
Amongst them, will be the extension of the light rail transit (LRT) from the Kelana Jaya and Ampang lines worth RM7 billion that was picking up pace, it said in a note yesterday. Local contractors were invited to submit expressions of interest for the project which should start work in three to four months.
The research house also noted that the RM1.3 billion Pahang-Selangor water transfer project was recently awarded to Shimizu Nishimatsu UEM Builders IJM JV with a project duration of five years.
“These projects, together with the ongoing Second Penang Bridge and double tracking coupled with more rollouts from the stimulus measures and 9MP (Ninth Malaysia Plan) will see cement demand revive in 2HCY2009,” Inter-Pacific added.
Exports, which make up 30% of LMC’s total sales volume is expected to remain resilient despite the global slump in construction and property development, said the research house.
It added that its operating costs, of which coal accounted for 24%, eased significantly following a 67% drop in price to US$62.60 (RM220.35) per tonne from its high of US$192 per tonne in July 2008.
Source: The Edge Financial Daily