Yanbu Cement Co.’s third-quarter net profit of SAR 17 million topped NCB Capital’s (NCBC) and consensus estimates of SAR 5.4 million and SAR 4.0 million respectively.
“We believe the variance came mainly from higher than expected prices on local cement sales which supported margins. Moreover, we believe clinker export sales supported the top-line significantly,” NCBC said in an earnings review.
Total local and export sales of cement and clinker stood at 1.22 million tons in Q3 2018, coming below NCBC’s estimate of 1.40 million tons.
Sales revenue dropped 11.4 percent YoY to SAR 153 million, missing the brokerage firm’s forecast of SAR 164 million.
Gross profit margins increased 189 basis points YoY to 17.6 percent in Q3 2018, well above NCBC’s estimate of 10.3 percent.
The beat was driven by higher than expected selling prices on local cement sales. Overall selling prices decreased -7.9 percent YoY to SAR 125.6/ton, compared to NCBC’s expectations of SAR 117/ton.
Local cement prices stood at SAR155/ton vs the brokerage firm’s estimates of SAR 145/ton and SAR 136/ton in Q3 2017, NCBC added.
The brokerage firm recommended “overweight” on the stock, setting its target price at SAR 37.
“We believe the mega projects announced near the Western region of Saudi, in addition to the 1.5 million ton export deal signed are key catalysts for the company in the long-run,” NCBC concluded.
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