Arabian Cement reports in-line figures in Q2 2019: NCB Cap

Arabian Cement reported an in-line set of Q2 2019 results, with a net profit of SAR 37 million versus a loss of SAR 50.9 million a year earlier, compared to NCB Capital and consensus estimates of SAR 37 million and SAR 29 million, respectively, NCB Capital said in a note.

NCB Capital attributed the “strong” YoY improvement to higher selling prices in Saudi Arabia and the improvement in Jordanian operations.

Total local cement and clinker sales volumes of Arabian Cement’s Saudi operations stood at 0.46 million tons in Q2 2019 versus NCBC estimates of 0.40 million tons. Selling prices in Saudi are expected to be similar to Q1 2019 levels at SAR 195/ton. Depending on the sales of Jordanian operations, actual selling prices in Saudi may have been as high as SAR 221/ton.

“We are Neutral on Arabian Cement with a target price of SAR 30.0. The higher selling prices is a positive, while the ongoing muted demand outlook in H2 19 remains a key short term risk for the sector,” the brokerage noted.

Demand from mega projects is expected to begin as of 2020 and Arabian Cement is expected to be a key beneficiary, provided its favorable location in the western region of the Kingdom.