Yamama Cement’s Q4 2020 revenue below estimates: Al Rajhi Cap

Yamama Cement bags

Yamama Cement Co.’s Q4 2020 revenue of SAR 211 million came below Al Rajhi Capital’s estimates of SAR 222 million, the brokerage firm said in an earnings review.

The firm attributed the lower sales to a 13.9% year-on-year (YoY) fall in the average realization of SAR 177 per ton. However, the strong momentum in real estate activities in the local market supported Yamama Cement’s sales growth during Q4 2020.

This growth is expected to continue in the coming period despite the growth rates for 2021 will be negatively affected on higher base in 2020.

Al Rajhi Capital further clarified that the company’s operating performance was impacted during the quarter by high price competition in the region.

Competition is forecast to retreat in the future, in addition to a gradual rise in the average realization due to the expected improvement in the utilization rate of production capacity.

The brokerage firm expects Yamama Cement to achieve a net profit of SAR 386 million in 2021, and a net profit of SAR 439 million in 2022.

It maintained its “Overweight” recommendation on the stock, while upgraded its target price (TP) to SAR 33 from SAR 32 per share.

"Overweight" implies that the stock is more than 10% above the current share price, and the share price is expected to reach the target on a 12-month time horizon, according to Al Rajhi Capital.