Albilad Capital said Saudi Cement Co.’s net profit of SAR 107.5 million in Q4 2017 has beaten its estimate of SAR 100 million, and upgraded the stock's target price to SAR 51 from SAR 46.
The company has also outperformed a consensus estimate of SAR 105 million, said Albilad Capital.
“We believe the deviation stemmed from the increase in the average selling price" set by the company in Q4 at SAR 242 per ton, versus SAR 231 in the earlier nine months.
Saudi Cement commanded a high average selling price compared to peers, obviously at the expense of sales volumes.
The company posted SAR 318.5 million revenue in Q4 2017-- 20 percent below Q4 2016, but 27 percent above Q3 2017.
The company sold 1.31 million tons of cement in Q4 versus 1.65 million in the same period a year earlier. However, for the entire year, the company’s net income almost halved to SAR 453.5 million in 2017 from SAR 901 million in 2016.
The decline in annual and Q4 2017 net income was triggered by the decrease in selling dispatches, higher cost of sales, lower profit share from associates, and lower other income, Albilad Capital said in its report.
“We believe the company will face a difficulty to maintain high selling prices, especially in light of high levels of clinker stocks coupled with weak demand in the local market, despite the expected benefit from the cancellation of export tariffs given the company's proximity to Saudi borders.”
Albilad assigned 'Underweight' rating to the stock, but upgraded target price to SAR 51 from SAR 46 per share after reviewing the company's future performance estimates.
Comments
{{DisplayName}}
{{ElapsedTime}}