Riyad Capital recommends ‘buy’ on Saudi Cement; lowers TP to SAR 123

Riyad Capital recommended “buy” for Saudi Cement on Monday, and reduced its target price from SAR 136 to SAR 123 per share.

Saudi Cement offers good prospects and benefits in the long term, which makes it a key player in the industry, the firm said.

Riyad Capital based its recommendation on concerns that may arise on the short-run as a result of declining delivery rates in the first five months of this year. Also affecting its estimates were increased inventory levels, which rose by 2 percent reaching 3.3 million tons, compared to a 10 percent decline for the sector’s inventory as a whole.

In addition, a drop in capital expenditures by the company’s clients in the eastern province may raise substantial concerns as well.

Riyad Capital said the cement producer’s shares exceeded the sector’s overall performance.

Moreover, Saudi Cement is expected to maintain its dividend level at about 6.3 percent for the fifth consecutive year.