Yamama Cement (YSCC) has posted a revenue of SR218 million ($58.12 million) in the third quarter, a y-o-y growth of 16.6%, which was slightly higher than analysts’ estimate of SR215 million, but lower than the average consensus estimates of SR233 million.
Growth in sales was supported by a 24.9% y-o-y growth in volume, though the same was tempered by a 6.6% fall in average realisation, an Al Rajhi Capital Research report said.
Cement sales volume for Q3 20 came in at 1.13 million tonnes, 6.3% higher than estimate of Al Rajhi Capital, though the average realisation at SR192/tonne was lower than our estimate of SR202/tonne.
Continued growth from mortgages aided volume growth, while competition among the local players and stabilisation of supply post-Covid kept the prices under check. Gross profits and operating income increased by 27.0% y-o-y and 33.4% y-o-y respectively, aided by higher volume and the resulting operating leverage.
For the nine months, YCC registered a volume growth of 23.9% y-o-y. Growth was aided by strong momentum in real estate activities in the local market. Going forward, we expect this trend to continue, though growth rates for 2021 will be tempered by the higher base in 2020.
"Average realisations are likely to continue to remain subdued, given the competitive nature of the local market. After taking into account the current quarter performance, we increase our target price to SR32/share from the earlier target price of SR25/share and have revised our rating from the earlier “Neutral” to “Overweight”, said Al Rajhi Capital Research. -- Tradearabia News Service