Qassim Cement Co. reported a net profit of SAR 40 million for Q4 2018, surpassing Riyad Capital and consensus estimates' of SAR 9 million and SAR 15 million, respectively, the brokerage said in an earnings review.
Revenue came in at SAR 115 million, above the brokerage's estimates of SAR 85 million, primarily on the back of both higher dispatches and rising prices.
"We believe Q4 marks a turnaround and combined with better demand forecasts on execution of mega projects announced in the Kingdom, we revised upwards our revenue and profit estimates for 2019 and beyond," the note added.
Sales of 726,000 tons in the quarter were markedly above 671,000 tons in Q3 2018 but stood lower than 1.05 million tons last year.
"We are happy to observe a change in direction of selling prices with prices of SAR 159/ton in Q4 as compared to a record low of SAR 111/ton in the preceding quarter as it appears producers have realized undercutting prices is in no one’s interest," the brokerage stated.
Riyad Capital recommended a "buy" rating on the stock, revising the target price higher to SAR 48 a share.
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