Aljazira Cap expects Yamama Cement to post SAR 244 mln income in FY 2019

Aljazira Capital expects Yamama Cement to post a net income of SAR 244.3 million in fiscal year (FY) 2019 compared to a net loss of SAR 51.8 million in FY 2018.

“Yamama Cement’s selling prices have recovered considerably during the last three quarters to reach SAR 206 per ton in Q3 2019, while dispatches declined by 18.5 percent year-on-year (YoY) due to losing some of its market share,” the brokerage firm said in a research note.

“Clinker inventory has reached 5.9 metric tons, which will be enough to cover more than 155 percent of the trailing volume sales,” the firm noted.

The firm further believes that the cement sector is continuing the recovery from its downtrend due to the producer’s concentration on selling prices and an increase in both local and export sales.

“The commercial production of the new plant is expected to commence in Q4 2020 with design capacity of 6.4 metric tons per annum. We also expect the new factory to be mostly financed through debt of SAR 3.5 billion,” Aljazira added.

The brokerage firm reiterated its “Neutral” recommendation on the stock with a revised target price (TP) at SAR 21.0 per share.