Southern Cement’s Q2 2019 profit misses estimates: NCB Cap

Southern Province Cement Co.’s Q2 2019 net profit of SAR 91 million fell short of NCB Capital’s estimates of SAR 105 million and consensus forecasts of SAR 101 million, the research firm said in an earnings review.

“The variance is due to lower than expected quantities (1.48 million tons versus our estimates of 1.6 million tons) and higher opex”, NCB Capital said.

It added that selling prices remained strong QoQ at SAR186 per ton in Q2 2019 versus SAR 137per ton in Q2 2018, a key highlight of the results.

The second quarter sales at SAR 276 million also missed NCB Capital’s estimates of SAR 297 million.

Gross margins expanded to 40.9 percent in the same period, from 28.6 percent in Q2 2018, coming in line with NCB Capital’s estimates.

The brokerage firm recommended an “overweight” rating on the stock, keeping its target price unchanged at SAR 57.40.

“The stability of selling prices is a key positive. Going forward, growth is expected to be driven by exports and the construction of Mega projects,” the brokerage firm noted.