Yamama Cement’s Q1 2020 results above estimates: Aljazira Cap

Yamama Cement Co.’s Q1 2020 net income of SAR 124 million is above Aljazira Capital’s and consensus estimates of SAR 90.5 million and SAR 90.6 million respectively, the brokerage firm said in an earnings review.

The brokerage firm added that Yamama Cement’s selling prices recovered considerably during past quarters to reach SAR 204.1 per ton in Q1 2020.

Aljazira Capital expected selling price to sustain the high level, and added that improved construction activities and housing initiatives are key growth driver for the Saudi cement sector in FY20.

However, the possibility of potential suspension of government support for housing projects is our downside risk for the sector, which could adversely impact the construction sector and mortgage loans growth.

The brokerage firm expected Yamama cement to post SAR 253.4 million in net income for FY20, against SAR 256.3 million in FY19, a decline of 1.1% year-on-year (YoY), mostly driven by the impact of COVID-19 in Q2 2020 earnings.

Aljazira Capital reaffirmed its “Neutral” recommendation on the stock with a target price of SAR 21 per share.