Riyad Capital cuts Yanbu Cement’s TP to SAR 78 on high inventory concerns

Riyad Capital has reaffirmed its buy recommendation on Yanbu Cement, and has reduced the stock’s target price from SAR 83 to SAR 78 on concerns of high inventory in the kingdom— which reached 2.7 million tons.

The cement producer has managed to slash inventory by eight percent, compared to 10 percent for the whole sector. However, the company’s inventory usage rate is better compared to large-cap peers, amid stable production levels.

Yanbu is seen to record significant performance in 2016, following two years of stagnant business activity, said the investment arm of Riyad Bank. It is also forecasted to pay higher dividends during 2017 and 2018, thanks to stable cash flows.