Yamama Cement reported a net profit of SAR 53 million for Q2 2019, versus a net loss of SAR 36 million in Q1 2018, in line with NCB Capital estimates, and consensus estimates of SAR 50 million, the brokerage said in a note.
Despite earnings being in-line, sales came 12 percent lower than expected due to lower than forecasted quantities, which led to the deviation in the top-line.
Sales increased 47.6 percent YoY to SAR 165 million, coming lower than estimates of SAR 188 million.
“We are Neutral on Yamama Cement with a target price of SAR 19.3, and the strong,” NCB Capital added, noting that selling prices for Yamama Cement and potentially the remaining players is a key positive.
However, the brokerage expected the selling prices will remain volatile as the outlook on quantities remains unclear during H2 2019.
“We expect further clarity on the timeline of Mega projects to be the key catalyst for an improvement in cement demand in Saudi going forward,” NCB Capital said.
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