Southern Cement's Q3 misses estimates, says Al Rajhi Cap

Southern Province Cement Co. reported a net profit of SAR 5.3 million (-91 percent YoY, -65 percent QoQ) in Q3 2018, which is lower than Al Rajhi Capital's estimates of SAR 46 million as well as consensus forecasts of SAR 40 million, Al Rajhi Capital said in a note.

This miss is mainly attributed to higher than expected cost of sale.

"...with the current economic situation, low construction activities and high competition we don’t believe prices are going up in the near term," Al Rajhi added.

In terms of sales, Q4 should witness a slight increase as there are no holiday breaks, however, due to high competition it might be also at the expense of selling prices.

Al Rajhi Capital changed estimates on the total expected volume and prices in the short run, thereby setting the stock's target price at SAR30, with a "Neutral" recommendation.

The demand of cement showing no signs of improvements which will lead to increasing competition and inventory levels, the brokerage said.