Aslak’s stock price matches performance uptick, capital cut to boost yields: CEO

United Wire Factories Company’s (Aslak) stock price came in line with its recent performance uptick, CEO Nabil Al-Amir told Argaam in an exclusive on Tuesday, expecting the stock to maintain solid gains upon trade resumption.

The trading halt placed on the stock for two business days is part of the company’s decision to reduce excess capital, to enhance its dynamics and stock yields, and cut some capital operating expenses.

Based on the latest financial statements, Aslak still sits on almost SAR 350 million piles of cash, which are sufficient for its existing operations and future expansions. Moreover, the company’s sales and profits increased by 30% and 70% year-on-year respectively in the first half of 2020.

In response to a question on the COVID-19 impact on Aslak, Al-Amir said the company allocated SAR 6 million provisions in H1 2020, with the business activity normalizing after the Hajj season.

“We will continue to assess the coronavirus crisis impact until the end of the year, but I do not expect a further negative impact, or see any need for more provisions,” he noted.

The company’s operations returned to the pre-pandemic level, Al-Amir added, considering that giga-projects such as NEOM, Qiddiya and the Red Sea, as well as the white land tax, will drive a strong momentum in the building and construction sector.

Elsewhere, Al-Amir said, “Based on the first-half financial results, distributable profits are satisfactory and sufficient. The board of directors will decide dividend distribution. The company has always been keen to distribute periodical dividends, and we hope to continue this trend.” The creditors' objection period for Aslak’s capital cut expired on Sept. 13, receiving no objection from its creditors, Argaam reported.

Aslak shareholders had earlier approved a 20% capital cut to SAR 351 million from SAR 438.75 million.

The Saudi Stock Exchange (Tadawul) placed Aslak shares on a trading halt on Sept. 14, 2020, for two business days.