NCB Cap maintains positive outlook for Saudi cement sector

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NCB Capital maintained a positive outlook on the Saudi cement sector, noting that the ongoing housing programs, the giga projects and the Public Investment Fund's (PIF) 2021-2025 strategy are expected to be the key drivers for growth in the sector.

The brokerage also projects local cement sales to grow by 3.5% year-on-year (YoY) in 2021 to 52.8 million tons, saying that this will likely result in a dividend yield of 5.1% in 2021. NCB Capital also expects prices to average SAR183/ton in 2021 on improving demand, indicating that selling price weakness remains a key risk. The brokerage said it prefers Saudi Cement due to its attractive dividend yield of 5.4% and a slight discount to the sector.

It also upgraded Eastern Cement to “Overweight” due to its high dividend yield and downgraded Yanbu Cement to “Neutral”, while noting that the stock is fairly valued at the current levels, after a strong price rally since its last update.