Saudi-based Eastern Cement Co.’s Q3 2019 profits of SAR 50.7 million exceeded estimates by 23.4% on higher selling costs, Aljazira Capital said in a research note.
The third quarter earnings further indicate that the 9.2% year-on-year (YoY) growth in volumetric sales was mainly supported by domestic sales of 465KT, while price realization jumped by 67.1% YoY.
“We believe, 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 note said.
“For 10M 2019, total sector dispatches stood at 40.5 metric tons (MT) (including exports) compared to 37.3 MT in 10M 2018, depicting an increase of 8.7% YoY,” it added.
The brokerage firm also said it expects the company to post SAR 165.1 million in net income for fiscal year (FY) 2019, an increase of 136.7% YoY.
Therefore, Aljazira Capital maintained “Neutral” recommendation on the stock with a target price at SAR 33.5 per share.
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