Riyadh – Mubasher: Albilad Capital reduced the fair value (FV) of Yanbu Cement Co from SAR 36.6 to SAR 33, with a “Neutral” recommendation.
The investment firm expected that the sector will face high competition in the coming period from new competitors in the western region, as well as weak demand in the local market and high clinker inventory, according to the report.
Yanbu Cement’s profits retreated 27.49% year-on-year to SAR 124 million in the first quarter of 2017 from SAR 171 million.
Albilad Capital stated that the Saudi-listed company’s Q1 results beat its estimates of SAR 92 million and the average of analysts’ estimates of SAR 96 million, as a result of an enhanced selling price average.
“Moreover, we expect the removal of subsidies on energy products to significantly impact profitability margins going forward, in addition to the pressure on cement prices to continue until domestic demand recovers, or the review of cement exports duties,” Albilad Capital added.
