Aljazira Cap. affirms ‘overweight’ on Qassim Cement, cuts TP to SAR 69.70

Aljazira Capital affirmed its “overweight” recommendation on Qassim Cement Co., and cut the share target price to SAR 69.70 from SAR 73.80.

The new price, however, indicates a potential upside of 13.4 percent over the current market price, Aljazira added in a research note.

“The company is trading at attractive forward PE and P/B of 10.9x and 2.8x respectively based on our 2016 earnings forecast,” the report said. “We anticipate the company to pay a dividend of SAR 5.5 in 2016 owing to a strong operating cash flow and no additional capital expenditure in the medium term.”

Qassim’s Q1 net profit fell 16.8 percent year-on-year (YoY) on higher production cost and oversupply in the market. The results were 7.9 percent lower than Aljazira’s estimates.

The company is expected to post SAR 506.2 million in net income for fiscal year 2016, a decline of 13.6 percent year-on-year due to higher fuel cost and low level in cement price per ton.