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Saudi Cement (SACCO) reported a drop in first quarter (Q1) net profit for 2019 on Wednesday, with revenues beating analysts’ estimates although earnings were in line with forecasts.
The company’s Q1 2019 net profit amounted to 132.4 million Saudi riyals ($35.32 million), compared to 142.2 million riyals in Q1 2018, translating into a 6.89 percent decrease, in line with EFG Hermes’ estimate.
Saudi Cement’s revenue stood at 390.4 million riyals in Q1 2019, compared to 330.5 million riyals in Q1 2018, an 18.12 percent increase.
Sameer Kattiparambil, an analyst at EFG Hermes, told Zawya by email that higher cement prices for SACCO came as a surprise.
“We have a Neutral rating on SACCO as its valuation seems stretched (2020 expected EV/EBITDA of 16.8x vs sector average of 12x) and the Eastern region does not offer any strong demand catalysts, unlike some of the other regions,” Kattiparambil said.
Saudi Cement’s stock gained 3.03 percent on Wednesday to 67.9 riyals and has added 39.86 percent so far since the start of 2019.
“However, SACCO is part of the MSCI EM (emerging market) standard index and we expect USD85mn inflows from this inclusion trade, which should support the share price in the short term,” he added.
(Reporting by Gerard Aoun; Editing by Michael Fahy)
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© ZAWYA 2019
