Al Rajhi Cap says higher sales supported Qassim Cement profits, raises TP to SAR 80/share

The growth in sales during the third quarter of 2020 for Qassim Cement was supported by a 31.4% year-on-year (YoY) rise in volume, Al Rajhi Capital said in a recent report.

The brokerage firm further states that the growth was aided by a strong momentum in real estate activities in the local market, expecting it to continue.

Cement sales volume for Q3 2020 stood at 1.2 million tons, 11.5% lower than Al Rajhi Capital’s estimates, indicating that average realizations are likely to come under pressure due to the competitive nature of the local market.

Growth rates for 2021 will be tempered by the higher base in 2020, the report added.

The firm expects Qassim Cement to record a net profit of SAR 431 million for the fiscal year 2020, with better dividends in the future.

The brokerage firm maintained an “Overweight” recommendation for Qassim Cement and increased the target price to SAR 80 per share.