Aljazira Capital maintained its “overweight” rating on City Cement, but cut its target price to SAR 23.20 a share from SAR 27 on lower-than-expected operating profit and lower sales prices.
“The company is witnessing a decline in sales price per ton in 1H-2015, however, strategic location and new production line to boost sales,” the brokerage arm of
Aljazira Bank said in research note on Sunday.
City Cement’s second quarter added 9.7 percent year-on-year to SAR 78.25 million on an increase in volume sales after the commercial production began at
the second line.
The adjusted share target price indicates a potential upside of 27.80 percent over the current market price of SAR 18.15 a share, Aljazira added.
The company is trading at an attractive PE with an expected dividend yield of about 6.8 percent, it said.
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