Yamama Cement’s Q2 2019 profits exceed expectations: Al Rajhi Cap

Yamama Cement’s Q2 2019 net profit of SAR 53.2 million exceeded Al Rajhi Capital’s expectations of SAR 42 million, the brokerage firm said in a research note.

“Since the past few quarters, cement producers are maintaining high selling prices to maintain revenue growth and we expect it to continue in the near future,” Al Rajhi Capital said.

The research firm forecasted the cement company to face few changes. “Upcoming relocation of its manufacturing facilities, soft demand, accumulating inventory and higher capex requirements are a few challenges for the company in the near future,” it said.

Al Rajhi Capital said that the downward key risks for the cement firm are higher than expected facility relocation costs, higher than planed capex requirement.

“The key upward risks are higher than anticipated cement selling prices and higher than forecasted government’s infrastructure spending pick up,” it added.

Post Q2 result, Al Rajhi Capital revised its estimates and change its target price of Yamama Cement to SAR 19/share. “We maintain our rating at Neutral on the stock,” it noted.