reports
- Talha Nazr
Arabian Cement: Q4 22 Result Analysis | Earnings miss on higher cost p...
Arabian Cement reported a weaker than expected set of Q4 22 results. Although net income increased by 50.6% yoy (-40.4% qoq) to SAR35.1mn, it was lower than the SNB Capital and consensus estimates of SAR50.0mn and SAR58.5mn, respectively. In Q4 22, average price realization stood at SAR250/ton, in line with our estimate. We believe the variance is mainly driven by higher than expected cost/ton of SAR192 (vs our estimates of SAR178). As a result, gross margins stood at 23.2%, below our estimat...
- Talha Nazr
Saudi Cement Sector: Q4 Update | Mega/Giga projects to support demand
We maintain our long-term positive outlook on the Saudi Cement sector. The acceleration of the Mega/Giga project will support long-term demand, whereas housing demand seems to have normalized as indicated by the slowdown in mortgage growth and low prices remain the main concern. In our view, the sector is going through a consolidation phase, as indicated by the ongoing M&A deals. We believe this may result in lower competition and better pricing mechanisms for the sector. We expect selling vo...
- Talha Nazr
Arabian Cement: Q3 22 Results Analysis | Strong results on higher
Arabian Cement reported a strong set of Q3 22 results, with the net income of SAR59.0mn increasing by 56.5% yoy (+31.1% qoq). This is higher than the SNB Capital and consensus estimates of SAR43.2mn and SAR50.6mn, respectively. We believe the variance in earnings is mainly driven by 1) higher selling prices which stood at SAR269/ton (+23.0% yoy, +17.9% qoq) vs our estimates of SAR240/ton, 2) improved gross margins which stood at 34.0% vs 30.4% in Q3 21 and our estimates of 31.5% and 3) lower ...
- Talha Nazr
Arabian Cement: Strong results on better margins
Arabian Cement reported a strong set of Q2 22 results with the income of SAR45.0mn increasing by 34.3% yoy (+7.4% qoq). This is higher than the SNB Capital and consensus estimates of SAR24.5mn and SAR27.1mn, respectively. We believe the variance in earnings is mainly driven by 1) higher revenue which stood at SAR231mn (-0.8% yoy, -10.9% qoq) due to higher selling prices 2) improved gross margins which expanded by 237bps yoy to 29.4% and 3) decline in opex due to lower general and administrati...
- Iyad KhalidÊGhulam
Saudi Cement Sector Q1 21 Update – Strong demand to support outlook
We maintain our positive outlook for the Saudi Cement sector. The ongoing housing programs, pick-up in the Giga projects and PIF’s 2021-2025 strategy are expected to be the key growth drivers. We estimate local cement sales to grow by +3.5% yoy in 2021f to 52.8mn tons, following strong growth of +20.7% yoy in 2020 to 51.1mn tons. This is expected to result in an attractive 2021f dividend yield of 5.1%, which is the sector’s major attractiveness. However, cement price volatility is a key conce...
- Ahmed Soliman
Egypt cements quarterly update | Falling demand drives prices down 6% ...
Demand down 14% y-o-y in 3Q20 as building permit halt continues to undermine construction activity. Domestic cement sales amounted to 10.2mn tonnes in 3Q20 (-14% y-o-y, +2.6% q-o-q), reflecting the impact of the government’s decision, on 25 March, to halt construction activity and building permit issuances for six months to counter building code violations, in addition to the impact of COVID-19. This means that full year 2020e demand is likely to register 44-45mn tonnes (down 7-9% y-o-y), far be...
- Iyad KhalidÊGhulam
Arabian Cement: Strong results on higher prices and margins
Arabian Cement reported a better-than-expected set of Q3 20 results with a net income of SAR79mn, increasing +30.2% yoy and compared to a SAR7.6mn in Q2 20. This is highest quarterly net income since Q4 17 and is significantly higher than the NCBC and consensus estimates of SAR44mn and SAR63mn, respectively. We believe the variance is mainly due to higher selling prices, better performance of Jordan operations and lower production costs. We are Neutral on Arabian Cement with a PT of SAR33.2. ...
- Iyad KhalidÊGhulam
Arabian Cement: Margins contract on higher cost/ton, clinker exports
Arabian Cement reported a net income of SAR7.6mn in Q2 20, decreasing 79.6% yoy (-83.2% qoq). This compares to the NCBC and consensus estimates of SAR5.5mn and SAR13mn, respectively. Sales came in higher than our estimates due to stronger than expected local sales, but it was partly offset by higher than expected gross margin compression. Gross margin came in at 22.2% in Q2 20 vs our estimate of 24.7% and significantly lower than 39.1% in Q2 19. Arabian Cement reported a net income of SAR7.6m...
- Ahmed Soliman
Stay Underweight; rally ignores cost burdens ahead
Stronger short-term headwinds arise. We hold our bleak long term Egyptian cement industry outlook as a result of sizeable new capacity due to come on stream. Also there are new developments driving us to expect short-term headwinds too; specifically notable cost inflation on EGP floatation and a rise in coal prices (in USD terms). We reduce our 2017-19 EBITDA estimates for ACC by an average of 16% p.a. and reiterate our Underweight call on the stock.
Ford Equity International Rating and Forecast Report
Ford Equity International Research Reports cover 60 countries with over 30,000 stocks traded on international exchanges. A proprietary quantitative system compares each company to its peers on proven measures of business value, growth characteristics, and investor behavior. Ford's three recommendation ratings buy, hold and sell, represent each stock’s return potential relative to its own country market.. The rating reports which are generated each week, include the fundamental details behind...
- Ahmed Soliman
Cut to Underweight: Cheap multiples justified by bleak outlook
New capacity yields bleak price outlook; cut 12M TP by 49%. The Ministry of Defence’s 13.2mn tpa greenfield project reported on 12 June 2016 means that the industry’s oversupply will last for at least 5 more years, in our view. As a result, we cut our long term industry cement price forecasts. A higher average cost of capital assumption of 17.9% (up from 13.6%) and higher coal prices (up c35% y-t-d) also lead to our lower TP. ACC trades on P/Es of 9.3x in 2016e and 5.2x in 2017e, but we expect t...
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