Yanbu Cement is forecast to post a net profit of SAR 248.9 million in fiscal year (FY) 2019, recording an increase of 173 percent year-on-year (YoY), Aljazira Capital said in a research note.
The brokerage firm added that the company’s Q3 2019 net income of SAR 61.4 million was above its expectation of SAR 53.5 million.
“It seems that the company will be able to maintain the export sales high, with total export sales of 2.4MT of clinker and cement in 9M 2019, resulting in an export revenue of SAR 191.7 million,” the note said.
“Volumetric sales surpassed our expectations to reach 1.42MT, compared to our estimates of 1.15MT. Gross margin expanded by 297bps to 33.1 percent from 30.1 percent in previous quarter due to improved selling prices,” it noted.
The brokerage firm also said that cement sector is continuing the recovery from its downtrend due to producer’s concentration on selling prices and an increase in both local and export sales.
“The company has an inventory of 4.2MT, which is enough to cover more than 69 percent of the total TTM sales volume,” it said.
Aljazira upgraded its recommendation to “Overweight” on the stock with a target price of SAR 35.50 per share.
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