AlJazira Cap says Yamama Cement Q2 2022 earnings beat forecasts, maintains ‘Neutral’ rating

Logo of Yamama Cement Co.

Yamama Cement Co.’s second-quarter net earnings of SAR 90.7 million were higher than AlJazira Capital and average consensus of SAR 73.8 million and SAR 47.5 million, respectively.

The average selling prices grew 48% quarter-on-quarter in Q2 2022, but were below SAR 226.3 per ton in Q2 2021.

“We believe sales prices to continue their rise in the coming quarters, due to the easing of pricing pressure in the central region,” the research firm said.

It expects conditions to slightly improve for the cement sector, led by a pick-up in giga projects during the second half of 2022.

“Additionally, the Ministry of Housing’s plans to provide more than 300,000 residential units across Saudi Arabia over the next few years will support cement demand from the housing sector over the mid to long-term, which would support Yamama Cement’s top-line.,” AlJazira Capital said.

However, it expects the cement producer’s costs to rise in the coming quarters, due to the expected higher depreciation and finance charges with the commencement of commercial production at the new plant.

“Hence, the current cost of SAR 82 per ton does not look sustainable,” the report issuer said.

AlJazira Capital maintained its “Neutral” recommendation on the stock, with a target price of SAR 27.9 per share.