NCB Cap says Eastern Cement’s Q4 2020 earnings beat estimate, recommends ‘Overweight’

Logo of Eastern Province Cement Co.

Eastern Province Cement Co. reported a net profit of SAR 58.7 million in Q4 2020, which came ahead of NCB Capital’s forecasts of SAR 53 million, but in line with analysts’ consensus.

The profit rise was mainly driven by higher-than-expected revenue, due to average selling prices of SAR 298/ton, compared to the brokerage’s expectations of SAR 285/ton, in addition to incurring lower-than-expected operating expenses, NCB Capital said in a note.

Key upside risks include strong competition, particularly in the Central Region, attractive dividend yields for 2021 at 6.3% and unjustified valuation discount compared to peers.

“We upgrade Eastern Cement to ‘Overweight’ and set the stock’s target price at SAR 51.8,” the brokerage stated.