Riyadh – Mubasher: AlJazira Capital has revised the target price (TP) of Eastern Province Cement Company (EPCCO) to SAR 37.1 per share and maintained its “Neutral” recommendation on the stock, according to a recent report.
In the second quarter (Q2) of 2020, Eastern cement achieved net income of SAR 30.5 million, missing AlJazira Capital’s estimates of SAR 36.2 million due to more than expected cost of goods sold (COGS).
Accordingly, the gross profit, totalling SAR 46.4 million, missed expectations by 13.9%. Moreover, revenue reached SAR 146.3 million and came in line with the agency’s expectation of SAR 146.4 million.
“We believe the cement sector will face some short-term challenges, that will affect dispatches, however, the outlook is expected to improve in the mid to long term. We don’t expect any price war among players due to the recognised impacts on the companies’ financials during the price war era,” the report noted.
AlJazira Capital also forecasts the company to generate strong free cash flow (FCF) of SAR 233.2 million, and achieve SAR 216.3 million in net income for 2020, an increase of 19.7% yearly.
