KUALA LUMPUR (July 2): CIMB IB Researh has downgraded the Building Materials sector to “Underweight’ (from Neutral) and said cement players are worse off after the job cancellations post-GE14.

In a note June 29, the research house said a significant source of demand recovery has now been wiped out for 2H18.

It  said earlier expectations of demand recovery no longer hold.

“We now expect a 3% decline in cement industry consumption for 2018 (2016: -6%, 2017: -8%).

“The price war could intensify in 2H18 on the back of an est. 13% growth in industry capacity as at end-2017. Price rebates will remain high to protect market share.

“We expect sustained earnings risk for Lafarge (only stock in our universe) as the group is likely to remain in the red for FY18F, with no catalysts in sight,” it said.

The research house downgraded the sector to Underweight from Neutral with an unchanged Reduce call for Lafarge Malaysia Bhd.