By BERNAMA
Research houses have maintained their “hold” calls on Lafarge Malaysia Bhd after it announced it would acquire PT Holcim Indonesia Tbk’s entire stake in Holcim (Malaysia) Sdn Bhd.
Last Friday, Lafarge Malaysia announced that the acquisition would cost RM330 million, following the merger completion of its ultimate holding company Lafarge SA with Holcim Ltd, now known as LafargeHolcim Ltd.
Affin Hwang Capital said the acquisition would increase Lafarge’s cement capacity by 9.2% to 14.14 million metric tonnes a year.
“We maintain our “hold” call on the stock with a target price of RM9.05,” it said in a note today.
In a separate note, HLIB Research said the acquisition would have minimal impact on Lafarge Malaysia’s earnings, given its large earnings base relative to Holcim Malaysia.
On funding, the research firm said Lafarge Malaysia would have no issue given its net cash of RM367.9 million as at end-June.
HLIB Research maintained its “hold” call on Lafarge Malaysia with a target price of RM9.59.
On outlook, Kenanga Research said domestic cement demand should remain resilient this year in line with the research firm’s gross domestic product growth forecast for the construction sector of 7.8%.
“Nonetheless, we remain cautious on the cement players’ earnings outlook given the persistent intense competition which will likely result in a price war due to the expected 14% capacity expansion in Peninsular Malaysia until next year,” it added.
Kenanga Research maintained its “underperform” rating on the stock with an unchanged target price of RM8.25.
As at mid-day, Lafarge Malaysia’s stock was unchanged at RM9.29.
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