KUALA LUMPUR (Oct 14): RHB Investment Bank Research has maintained its “overweight” rating of the building materials sector due to the tight global aluminium supply, increasing global decarbonisation towards low-carbon content aluminium, and improvement in cement demand pending the roll-out of infrastructure projects post elections.

In a note on Friday (Oct 14), the research house said its sector top pick is Press Metal Aluminium Holdings Bhd (PMAH) given it is a proxy for low carbon-producing aluminium smelters in the Asean region and its proactive hedging policy which should shelter its realised average selling price (ASP) amid softness in London Metal Exchange (LME) prices.

The research house said it maintained its ESG score for Malayan Cement Bhd (LMC) despite an improvement in the “S” factor on the back of zero workplace fatalities as the ESG disclosure was inadequate given the lack of further deliberation from LMC compared to the other operations of its largest shareholder YTL Corp Bhd.

“We downgrade Cahya Mata Sarawak Bhd’s ESG score to 2.3 from 2.4 as we think the governance aspect remains weak and should continue to be a key concern among investors,” it said.

RHB IB said key downside risks include a decline in LME aluminium prices, higher-than-expected raw material costs, and lower-than-expected cement ASPs.