We maintain an ACCUMULATE rating on Yamama, raising its target price to SAR 57.74 from SAR 51.20 previously, after it was reached during June 2013 and continues to rally. Our overweight rating is further supported by the attractive dividend yield of 6% in addition to the company’s location advantage and high capacity and inventory levels which gives it the ability to be a first mover in case of a sudden rise in demand in the central region.
Revenues at Yamama reached SAR 938 million in the first half of 2013, up by 3.8% from SAR 904 million registered a year earlier, mainly due to higher sales volumes and pricing. We estimate sales to reach SAR 1.65 billion in 2013, 5% higher than SAR 1.58 billion recorded a year earlier, driven by the flourishing construction activity. Net profit rose by 11.8% during H1 2013 to reach SAR 544 million as opposed to SAR 487 million a year earlier. We estimate 2013 net income to register a growth of 7.8% to SAR 898 million.
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