Qatar – Mubasher: The research team at MubasherTrade initiated coverage on Qatar National Cement Co., with a target price of QAR 141, with 45% expected total return, placing a ‘Buy/Moderate Risk’ recommendation.
QNCC is the first and the largest (54% market share) cement company in Qatar. Established in 1965, QNCC has expanded its production capacity from a single production line producing 100,000tpa to four production lines with a current total capacity of 4.65mtpa.
Qatar has witnessed a strong growth of 71% in the construction sector over the last five years. The sector is expected to continue the robust growth in the coming years, supported by USD200bn of investments in infrastructure projects as part of the country's 2030 development plan, a timeframe that includes hosting the FIFA World Cup 2022. In turn, this should translate into a robust demand for cement, expected to exceed 10mtpa by 2020 from the current 6.5mtpa in 2014. This should boost QNCC's revenues, utilization rates, and consequently its bottom line, according to MubasherTrade.
“QNCC's cement plant V is currently under construction with a designed capacity of 5,000tpd of clinker and an estimated investment of c.QAR950mn. The new facility will increase the company's production capacity to 5.07mtpa of clinker and 6.30mtpa of cement. We expect the new production facility to start operations at the beginning of 2017, which should enable the company to absorb pent-up demand for cement,” said the research team.
