AlJazira Cap remains positive on Saudi cement sector, raises ratings for 5 firms
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AlJazira Capital said that it remains positive on the Saudi cement sector, based on expected housing demand due to increase in mortgage loans and the government’s mega projects.
Improved cement prices led to recovery on the sector’s fundamentals, the brokerage firm said in a report, expecting the average selling price to reach SAR 198.9 per ton and have attractive dividend payments for fiscal year 2020.
Southern Cement and City Cement are expected to register the highest earnings per share (EPS) growth to stand at SAR 4.64/share and 1.52/share, respectively.
The fast recovery after pandemic and VAT hikes in the cement sector increased AlJazira Capital’s estimated growth in net income to 16.4% year-on-year (YoY) in FY2020.
The firm expects inventory level to noticeably decline in the mid-term, driven by estimated improved cement consumption, which will offset the impact of expected decline in export sales in 2020 and 2021.