Alert on Q3 2013- Maintaining our ACCUMULATE on Yamama Cement on positive outlook and attractive dividend yield

We maintain our ACCUMULATE rating on Yamama, raising our target price from SAR 57.74 to SAR 62.59 after it was reached in November. This only presents a 4.8% premium over its current closing price of SAR 59.75, however the potential return becomes rewarding when combined with its attractive dividend yield of 6%.

Yamama revenues fell by 4.0% y-o-y in Q3 2013 to SAR 294 million, affected by lower sales volume following a slowdown in construction activity during the month of Ramadan. Conversely, the company posted a 1.8% rise in revenues during the first nine months of 2013 to reach SAR 1,232 million. We estimate revenue to reach SAR 1,654 billion in 2013, increasing at a CAGR of 3.7% between 2013 and 2016. Yamama managed to report a 7.6% increase in bottom-line during the first nine months of 2013 to attain SAR 693 million. We estimate earnings to grow at a CAGR of 3.7% in the next three years, rising by 7.8% in 2013 to SAR 898 million.

A short term development to monitor is the government’s crackdown on illegal workers in line with its policy of Saudization; this may continue to negatively affect the construction activity of real estate developers in the near term.

Click below for the full report:

Yamama Update for Q3 2013

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