Riyadh- Mubasher: NCB Capital (NCBC) stated in a recent research note that it will remain Overweight on Yanbu Cement with a PT of SR57.0 per share.

The research house said its valuation is driven from high demand areas and high dividend yields of 8.4% for 2016E. NCBC also believes that Yanbu Cement is also positioned to benefit from the potential export ban removal given its proximity to Egypt and East Africa.

Yanbu Cement results for the second quarter of 2016, came almost in-line with NCBC estimates.

The company’s net income declined by 35.2% y-o-y to SAR 159 million, which NCBC believes it came as result of higher costs from the revision in fuel prices and weak sales due to the Ramadan effect.

Sales quantities of the company declined 21.8% y-o-y in 2Q16 vs. industry’s decline of 9.4% y-o-y.

Meanwhile, NCBC thought the revision in fuel prices led to an increase of 11% y-o-y in the cost/ton to SAR104.5/ton in the second quarter of 2016.

Yanbu Cement trades at 2016E P/E of 10.2x vs. sector at 10.6x. The dividend yield of the company is attractive at 8.4% for 2016E.