Yamama Cement’s Q4 2020 net profit tops estimates: Aljazira Cap

Yamama Cement’s Q4 2020 net profit exceeded Aljazira Capital and consensus estimates of SAR 78.6 million and SAR 77.5 million, respectively, the research firm said in a recent report.

The improved earnings were driven by a one-off gain of SAR 39.2 million from liquidation of Hail Cement shares, Aljazira Capital said.

Revenue stood at SAR 210.7 million, against the estimates of SAR 231.7 million.

“We believe that the selling prices will remain low for the coming two quarters, due to adjustment in prices as a result of value-added tax (VAT),” the report said.

“The producers instead of passing on the VAT seem to be absorbing the impact. This can create an opportunity for long-term investors as high demand for cement will eventually push selling prices,” it added.

Aljazira Capital expects the cement sector to show a short-term decline in net income due to selling price discount. However, the firm is optimistic on the sector for the long-term with the increase in mortgage loans, and the future demand from giga-projects.

Yamama Cement is expected to post SAR 278.1 million in net profit in 2021, a decline of 23.4% year-on-year (YoY).

Aljazira Capital maintained its “Neutral” recommendation on the stock with a target price of SAR 24.9 per share.