Qassim Cement’s Q3 figures miss forecasts, says Al Rajhi Capital

Qassim Cement Company’s Q3 2018 bottom-line fell short of Al Rajhi Capital’s estimate of SAR 18 million as well as consensus estimate of SAR 16 million, Al Rajhi Capital said in an earnings review.

Qassim Cement reported net earnings of SAR 5.7 million, declining 89 percent year-on-year (YoY), and 69 percent quarter-on-quarter (QoQ) in the third quarter of 2018.

The profit miss was attributed to lower revenue as average selling price dropped 24 percent YoY and 10 percent QoQ to SAR 113/ ton as well as lower than expected volume sold.

“Going forward, we forecast Qassim’s sales quantity to increase slightly next quarter as there are no holidays (seasonally strong quarter)… We do not believe prices will witness improvements next quarter,” Al Rajhi Cap. noted.

Q3 2018 revenue came in at SAR 74 million, missing estimates of SAR 89 million.

Qassim Cement has low inventory of 3.3 million tons, and almost maintains zero amount of debt.

“We believe these factors will help the company to resist current hard condition,” the brokerage added.

Al Rajhi Capital reiterated the stock’s target price at SAR 33.5/share and maintained a Neutral rating.