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KUALA LUMPUR (Feb 15): Hume Cement Industries Bhd’s net profit declined 41.04% to RM4.47 million for the second quarter ended Dec 31, 2022 (2QFY2023), from RM7.58 million a year earlier, dragged down by higher input costs from coal and electricity.
This is despite quarterly revenue rising 31.97% to RM255.27 million, from RM193.44 million in 2QFY2022, following a revision in cement’s retail selling price and higher sales volume, the group said in a filing with Bursa Malaysia.
- Malaysia's cement sector is expected to see further cement price hikes, with the emergence of a price leader in the market (controlling close to 60 per cent of total industry clinker capacity) following YTL Cement Bhd’s acquisition of Malayan Cement Bhd in 2019.
- In Malaysia, supply pressure appears after Malayan Cement and Cement Industries of Malaysian Bhd put one clinker plant offline, effectively removing clinker capacity totalling 2Mta, equivalent to eight per cent of total domestic clinker capacity from the market.
- In China, recent carbon emissions crackdown have caused supply shortages and pushed local cement prices higher. China’s average cement price spiked 30+% since September, reaching all time high. This bodes well for Malaysian cement player that exports to China, and shall further lift Malaysia’s cement price.
- With the economy reopening, the worst is over for the property and construction sector, the cement sector appears as a laggard compared to other reopening stocks. Being the fourth largest cement producer in Malaysia in terms of clinker capacity, Hume has a healthy utilisation rate of 80-90% (vs industry average of 60-70%) and better operational efficiency.
- On technical analysis, Humeind have been retracing from recent high of 1.20 and year high of RM1.45, which provides a good trading range of 14-38%. Candlestick pattern last week also formed a hammer, which is usually seen as a reversal trend, with rising volumes.
- Disclaimer: This is not a buy/sell call, just personal analysis. Kindly trade/invest at your own risk.
