Saudi-based Yanbu Cement has recorded a revenue of SR240 million ($64 million) for third quarter, up 5.4 per cent over the same period last year.
Growth in sales was supported by a 35% YoY growth in volume, though the same was tempered by a more than 20% fall in average realsation, according to Al Rajhi Capital, a leading financial services provider in Saudi Arabia.
Continued growth from mortgages aided the increase of volume, while heavy competition among the local players kept the prices under check.
Cost of sales and operating costs fell by 1.2% YoY and 34.2% YoY respectively, aided by higher operating leverage, stated Al Rajhi Capital in its review.
"Cement sales volume for Q3 came in at 1.16 million tonne, 5% higher than our estimate, though the average realization at SR208/ton was lower than our estimate of SR212/ton," it added.
Al Rajhi Capital said this was slightly higher than its estimate of SR234 million, but lower than the average consensus estimates of SR253 million.
For the nine months, Yanbu Cement registered a volume growth of 27.5% YoY. Growth was aided by strong growth 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 realizations are likely to continue to remain subdued, given the competitive nature of the local market," said the Saudi group in its statement.
After taking into account the current quarter performance, we increase our target price to SR40/share from the earlier target price of SR30/share and have revised our rating from the earlier “Neutral” to “Overweight”, he added.-TradeArabia News Service