In a recent report, AlJazira Capital has stated that Yanbu Cement’s Q3 2014 financial results showed a deviation of 12.6% from its estimate and 13.3% from the market consensus due to recognition of the government subsidy on imported clinker.
The research firm reiterated its ‘Neutral’ recommendation on the stock, with a downside potential of 0.9% from the current market prices of SAR 74.33 a share (as of October 14, 2014).
AlJazira maintained the stock’s 12-month price target at SAR 73.6.
Q3 2014 net earnings reached SAR 163 million, growing 16.43% year-on-year from SAR 140 million but decreasing 32.37% quarter-on-quarter from SAR 241 million.
The nine-month earnings netted SAR 609 million, falling 7.87% from SAR 661 million in the same period of last year.
The cement producer said the growth in Q3 net profit y/y was due to the lower cost of sales on boosting production and receiving the clinker import subsidy in Q3.
The nine-month profit decline y/y was due to the lower sales quantity, Yanbu Cement said.
The company also ascribed the decrease in Q3 profit q/q to the lower sales quantity in Ramadan and Eid al-Fitr holiday, as well as the collection of miscellaneous revenues.