Eastern Cement keeps ‘overweight’ rating; TP cut to SAR 51.8: Aljazira Capital

Aljazira Capital has maintained its “overweight” rating on Eastern Province Cement Company (EPCC), while slashing its stock target price to SAR 51.80 from SAR 66.50.

Despite the decline in local demand, the cement producer’s Q2 results improved 9.2 percent compared to the first quarter on higher precast concrete sales, the brokerage firm said in a report.

Security concerns in Yemen, which have hit manufacturing activity in the country, have negatively impacted the company’s valuation due to added risks. Arabian Yemen Cement Company, which is 31.58 percent owned by EPCC, had previously reported disruptions in fuel and raw material supplies for clinker production.

EPCC, however, said that supply challenges had been addressed and that production has returned to normal levels.

Aljazira Capital estimated an increase in revenue for Eastern Cement to SAR 925.3 million during this year with an expected net profit of SAR 297.9 million.