Saudi Arabia’s Yanbu Cement posted a rise in net profit for the first quarter (Q1) of 2019 on Wednesday, triggering a rally in the company’s shares.
Q1 2019 net profit after zakat and tax amounted to 72.85 million Saudi riyals ($19.45 million), compared to 40.2 million riyals in Q1 2018, translating into an 81.22 percent increase.
“Yanbu reported good 1Q19 results, which were driven by the rally in cement prices, despite being in the highly competitive Western region,” Sameer Kattiparambil, an analyst at EFG Hermes told Zawya by email, adding that the net profit had significantly beaten EFG Hermes’ estimate by 74 percent.
“The company’s strong export business partly relieved local demand pressure. While we expected cement prices to recover in 2019, the actual recovery has so far surprised us and is the key upside risk to our estimates,” Kattiparambil said.
Q1 2019 revenue amounted to 259.81 million riyals, a 20.54 percent increase on Q1 2018’s revenue of 215.5 million riyals.
The company’s shares added 4.36 percent by 15:00 GST on Wednesday to 31.15 riyals and have gained 29.79 percent so far since the start of the year.
Yanbu Cement is EFG Hermes’ top cement sector pick, according to Kattiparambil.
“We have a Buy rating on Yanbu Cement because of its close proximity to multiple regions (located in the high-demand Western region, with access to the North-Western region, where mega-projects have been announced).”
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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