Eastern Province Cement Co.’s net profit of SAR 46 million for the first quarter of 2019 has beaten Aljazira Capital and market consensus estimates of SAR 34.4 million and SAR 30.7 million, respectively, the research firm said in an earnings review.
Profit jumped more than twofold year-on-year (YoY) in the quarter.
“YoY growth was attributed to an increase in volumetric sales by 12.1% and an increase of 30% in selling price,” the report said.
Sales stood at SAR 181 million, above the estimates of SAR 168.4 million on higher selling prices and volumes.
Price per ton reached SAR 231 versus SAR 223 in the previous quarter, and will likely continue at high levels.
Gross profit was SAR 58 million, also above forecasts due to a 30.5 percent increase in revenue.
Cost per ton probably amounted to SAR 149.3 compared to the estimates of SAR 158.1 per ton.
Q1 figures indicate a 12.1 percent YoY increase in volumetric sales mainly backed by exports of 145,000 tons, while prices jumped 30 percent YoY to record high levels since 2016.
“We believe, cement sector is starting to recover from its current downtrend due to producer’s concentration on selling prices and an increase in export sales. Selling prices are expected to sustain the high level in FY19,” the brokerage said.
Furthermore, mega projects and other housing initiatives are the key growth driver for the Saudi cement sector and could be realized beyond FY19, it added.
Eastern Province Cement is seen to post SAR 145.5 million in net profit for fiscal year 2019, more than double its earnings last year.
Aljazira Capital recommended a “Neutral” rating on the stock with a target price of SAR 28.8 per share.
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