Yanbu Cement Co.’s fourth-quarter 2018 net profit of SAR 34.3 million topped Al Rajhi Capital and consensus estimates’ of SAR 12 million and SAR 17.9 million respectively, driven by higher-than-expected average prices.
The company sold 1.35 million tons of cement and clinker with an average price of SAR 148 per ton. Gross and operating margins improved to 29 percent and 22 percent, respectively, in Q4 2018, from 16 percent and 8 percent in the previous quarter, largely on account of lower cost per ton.
"Going forward, we expect local demand to be flat; however, companies will be able to continue maintaining current level of prices for the short term," it added.
The total dividends distributed for 2018 is SAR 157.5 million, implying 173 percent pay-out ratio with 5.4 percent dividend yield.
“We don’t believe this level of pay-out is sustainable as the cash position of the company is not solid, which will force the company to increase debt to finance its working capital,” the report noted.
Al Rajhi Capital assigned a “neutral” rating to the stock, revising it lower to SAR 25 a share.
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