Riyadh- Mubasher: Al Rajhi Capital Research said that Yanbu Cement will remain one of its top pick in the Cement sector because of its strategic location in the Western region.

The research house said it will also continue with its Overweight rating on Yanbu with a target price of SAR50 per share.

Yanbu Cement posted net profits of SAR 159 million for the second quarter of 2016, below the estimates of both Al Rajhi Capital and consensus that came at SAR168 million and SAR169 million respectively.

Al Rajhi Capital pointed out that Yanbu Cement earnings were negatively impacted by lower fuel subsidy, Ramadan season and higher competition, which led the company to offer higher discounts on selling prices.

Meanwhile, The trend of falling sales volume and profitability has been witnessed across the cement sector as the Kingdom’s construction activities continue to be under pressure.

The company’s gross profit and operating profit at SAR170mn and SAR158mn (-35% and -37% y-o-y respectively), were below Al Rajhi Capital estimates primarily due to higher than anticipated cost of goods sold and lower than estimated average realized price per ton.