Shares in Oman’s Raysut Cement surged on Monday, as the company reported better-than-expected net profit for the fourth quarter (Q4) of 2018 and a jump in revenues.

The company recorded a revenue of 26.9 million Omani riyal for Q4 2018, a 57 percent increase on the 17.2 million Omani riyals earned in the same period last year.

Q4 2018 net profit stood at 2.17 million Omani riyals, compared to a net loss of 0.77 million for the same period last year.

The strong quarterly performance also boosted revenues and earnings for the whole of 2018.

Net profit for the full year stood at 4.2 million Omani riyals ($10.9 million), which was lower than the 5.8 million Omani riyals earned in 2017. Full year revenue for 2018 increased by 26.5 percent to 91 million Omani riyals, up from 71.9 million Omani riyals in 2017.

Ammar Salim, senior research analyst at Ubhar Capital, told Zawya by email that the Q4 2018 net profit beat “analysts’ estimates by at least 50 percent,” and that Raysut Cement's revenues were the highest of any quarter in its history.

“Net profit (for Q4) stood at OMR 2.17mn, the highest in two years on (a) quarterly basis,” Salim said, adding that its “cost-to-income ratio (cost of sales/revenue) went down from two years average of 80 percent to 78.6 percent in 4Q’18.” (Cost of sales in Q4 2018 amounted to 21.2 million Omani riyals).

“We believe that if the company holds this performance for 1Q’19, this shall be read as a confidence sign by the investors. Moreover, if it gives a dividend payout of 80–100 percent, this will result in (a) dividend yield of 4.5–5 percent at the current price,” Salim added.

Following the results announcement, the company’s shares outperformed the rest of the stocks on the Omani index and jumped 9.19 percent on Monday, to reach their highest level so far in 2019, helping Oman’s stock market to end the day 0.11 percent higher.

The company's shares have increased in value by 6.32 percent so far this year, compared to a drop of 51.3 percent in 2018.

“The stock lost 51.3 percent of its value in 2018, creating a good recovery chance. Any opportunity for the stock appreciation (is) not to be missed after the recent performance,” Salim said.

“The stock price is lower by at least OMR (Omani rials) 0.100 to the nearest target price,” he added. The company’s share price was last trading at 0.404 Omani riyals on Monday.

According to data from Eikon, one analyst has a 'buy' rating on the stock and one analyst has a ‘hold’ rating.

“We think that (the) export segment is getting momentum and any development in Yemen will result in better earnings in the future, taking into account that it forms 50 percent of the exports historically,” Salim ended.

The Yemen war started back in 2015 and Raysut Cement has seen disruptions in its exports to the country since then. (Read more)

Elsewhere in the region, Dubai’s index dropped 0.41 percent on Monday, Abu Dhabi’s index gained 0.61 percent, Saudi Arabia’s index closed 0.25 percent lower,Qatar’s index edged 0.17 percent higher while Kuwait’s premier market and Bahrain’s main market indices were mainly flat and Egypt’s blue-chip index EGX30 dropped 1.41 percent.

(Reporting by Gerard Aoun; Editing by Michael Fahy)

(gerard.aoun@refinitiv.com)

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