Cement Dispatches for June 2017 - Aljazira Capital
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Cement dispatches: A decline of 40.6%YoY for the month of June 2017 standing at 2.08mn tons comparing to 3.50 in June 2016; inventory levels showed an increase of 42.3%YoY. For 6M-2017 cement dispatches stood at 24.88mn ton compared to 31.71mn ton in 6M-2016, depicting a decline of 21.6%YoY. Despite the government’s decision to cut the export tariffs on cement export by 50%, we believe that this step is not enough to spur exporting activity by the local producers.
Change in Cement Dispatches
Source: Yamama Cement, AlJazira Capital
5,000
Change %(RHS)
Dispatches (1000 Ton)(LHS)
35%
4,500 4,000
15%
3,500
Cement dispatches declined by 53.9%MoM, standing at 2.08MT compared 4.51MT in May 2017, due to Ramadan season and
-5%
3,000
Eid holidays falling in the same month (June 2017).
2,500
-25%
Utilization Rate (TTM)
81.3%
79.8%
Saudi cement sector declined to 78.0%
76.7%
75.0%
68.3% in June 2017 compared 74.7%
to 84.2% in June 2016. 73.3%
71.9%
Change in Clinker Inventories
70.5%
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
70.0%
Jun-16
Jun-17
May-17
Apr-17
The total Utilization rate of
68.3%
Jun-17
82.5%
80.0%
65.0%
-45%
Source: Yamama Cement, AlJazira Capital
May-17
85.0% 84.2% 84.3% 83.6%
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
1,500
Jun-16
2,000
Source: Yamama Cement, AlJazira Capital
32,000
14% 12% 10%
29,000
8% 6%
26,000
4% 2%
23,000
Inventories
showed
an increase of 9.2%MoM and stood at 31.18MT compared to 28.47MT in May 2017.
Clinker Inventories(1000 Ton)(LHS)
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0%
Jun-16
20,000
Clinker
-2% -4%
Change %(RHS) Analyst
Waleed Al-jubayr
1
+966 11 2256146 [email protected]
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Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Cement Dispatches for June 2017
Source: Yamama Cement , AlJazira Capital
700
0.0%
AlSafwa cement showed the
500
-20.0%
least decline YoY of 5.9%. While,
600 400
-40.0%
300 200
-60.0%
0
-80.0%
June - 17
Umm AlQura
Hail
AlSafwa
AlJouf
Northern
City
YoY Change (%) -RHS
Cement Dispatches for 6M-2017
United Cement
June - 16
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
Yamamah
100
6.0%
3400 2850
-14.0%
2300 1750 1200
-34.0%
100
-54.0%
Sales / Production for 6M-2017
United Cement
Hail
AlSafwa
AlJouf
Northern
City
YoY Change (%) -RHS
Umm AlQura
6M-17
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
650
Yamamah
highest decline of 61.3%YoY, followed by Northern cement which showed a decline of 60.3%YoY.
Source: Yamama Cement , AlJazira Capital
3950
6M-16
Tabuk cement showed the
For 6M-2017, city cement was the only company to show growth in dispatches at 5%YoY. While Northern cement and Najran cement showed a decline of 51.7%YoY and 44.9%YoY respectively.
Source: Yamama Cement , AlJazira Capital
105.0% 100.0%
Northern
cement
and
Qassim cement showed the highest
95.0%
sales
/
production
Sales / Production
Clinker Inventories
460.0% 400.0% 340.0% 280.0% 220.0% 160.0% 100.0% 40.0%
4000 3000 2000
2
Hail
United Cement
YoY Change (%) -RHS
AlSafwa
AlJouf
Northern
City
Najran
Riyadh
Tabuk
Jun-17
Umm AlQura
Jun-16
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
Yamamah
1000
© All rights reserved
respectively. hand,
AlJouf
On
the
cement
other and
United cement showed a sales/ production ratio of 96.3%.
Source: Yamama Cement , AlJazira Capital
5000
0
United Cement
Umm AlQura
Hail
AlSafwa
AlJouf
Northern
City
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
90.0%
Yamamah
ratio of 101.7% and 101.3%
-20.0%
AlSafwa cement showed the highest increase of 280.6%YoY in its inventories level, followed by AlJouf cement which showed an increase of 273.4%YoY. On the other hand, Riyadh cement showed a decline of 6.6%YoY.
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Market share
Source: Yamama Cement , AlJazira Capital
Market Share TTM
United Cement
Hail
YoY Change
Umm AlQura
Market Share Jun-17
AlSafwa
Northern
Tabuk
Southern
Saudi
Market Share Jun-16
AlJouf
-40.0%
City
-25.0%
1.0%
Najran
-10.0%
3.0%
Riyadh
5.0%
5.0%
Arabian
20.0%
7.0%
Yanbu
35.0%
9.0%
Qassim
11.0%
Eastern
50.0%
Yamamah
13.0%
Saudi and Southern cement recorded the highest market share of 12.0% and 11.0%, respectively, in June 2017. While Tabuk cement, recorded the lowest market share of 1.4%. AlSafwa cement showed the highest increase in its market share from 2.9% to 4.6%, while Tabuk cement showed a decline in its market share standing at 1.4% from 2.1% in June 2016.
Source: Yamama Cement , AlJazira Capital 2% 2%
2%
Southern
Yanbu
Saudi
3%
Yamamah
Qassim
Najran
AlSafwa
Umm AlQura
highest market share of 12.2% followed by Saudi cement with
7%
Tabuk
Hail
Yanbu cement recorded the
12%
5%
AlJouf
Northern
On TTM basis, Southern and
4%
Riyadh
Eastern
12%
4%
Arabian
City
3%
1%
United Cement
12%
market share of 12.0%.
7% 7%
EV / Ton (in ‘000 SAR)
10%
8%
Source: Bloomberg, Yamama Cement , AlJazira Capital
1000.0
Tabuk cement recorded the
800.0
highest EV/Ton of SAR 998.3,
600.0
followed by AlJouf cement with EV/Ton of SAR 977.8. On the
400.0
Hail
AlJouf
Northern
City
Najran
Tabuk
Sector EV/Ton
P/E & P/BV
2.75
20.00
2.25
P/E
© All rights reserved
P/BV
Umm AlQura
Hail
AlJouf
Northern
City
Najran
Tabuk
Arabian
Yanbu
Qassim
Eastern
Saudi
5.00
Southern
10.00
Yamamah
recorded the lowest EV/Ton of SAR 412.1.
Source: TADAWUL , AlJazira Capital
25.00
15.00
3
Umm AlQura
EV/Ton
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
other hand, Yamama cement Yamamah
200.0
Arabian Cement recorded the lowest P/E of 9.59x, followed by
1.75
Saudi cement with P/E of 9.63x.
1.25
On the other hand, Tabuk cement
0.75
recorded the highest P/E of
0.25
22.61x. AlJouf cement recorded the lowest P/BV of 0.64x, while Qassim cement recorded the highest P/BV of 2.52x.
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Company News & Events Company Name
Date of Announcement
Southern Cement
10-07-2017
Qassim Cement
05-07-2017
Yanbu Cement
02-07-2017
Corporate Event & Announcement
Southern Cement’s board of directors has recommended cash dividend of SAR 1.00 per share for 1H-2017.
Qassim Cement’s board of directors has recommended cash dividend of SAR 0.65 per share for 2Q-2017.
Yanbu Cement’s board of directors has recommended cash dividend of SAR 0.75 per share for 1H- 2017.
Tabuk cement announced that it started the commercial production for its second Tabuk Cement
22-06-2017
production line, but both production lines cannot be running together due to lack of fuel allocation.
Yamama Cement Co. signed an agreement with the National Commercial Bank Yamama Cement
20-06-2017
(NCB) and Samba Financial Group to increase secured facilities to SAR 3.6bn from SAR 1bn, and extend the maturity date to January, 2025.
Najran Cement’s board of directors approved to put on hold plans for setting up limited liability companies for mining and transport services. The establishment of Najran Cement
25-05-2017
the mining firm was postponed as the ministry of mineral resources has suspended issuance of new mining licenses until law amendments are finalized. Plans for the transport company were also shelved due to the current market conditions.
Hail Cement
16-05-2017
Hail Cement Co. has received a new cement export license, valid for one year, from Saudi Arabia’s Ministry of Commerce and Investment. Source: The Saudi Stock Exchange - Tadawul
4
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Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Dispatches & Change Yamama Cement
-2%
1,500 1,000
-4%
0
-8%
-6%
Jun-17
500
May-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-80%
Sep-16
0
Aug-16
-60%
Jul-16
100
0%
2,000
Apr-17
-40%
2%
2,500
Mar-17
200
4%
3,000
Feb-17
-20%
6%
3,500
Jan-17
0%
300
8%
4,000
Dec-16
20%
400
Change %(RHS) 10%
Clinker Inventories('000 Ton)(LHS)
4,500
Nov-16
40%
500
5,000
Oct-16
60%
Sep-16
Change %(RHS)
Aug-16
Dispatches ('000 Ton)(LHS)
Jul-16
600
Saudi Co SaudiCement Cement
1,000
-2%
0
Jun-17
-60%
0%
May-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
100
2,000
Apr-17
-40%
2%
Mar-17
200
4%
3,000
Feb-17
-20%
4,000
Jan-17
300
6%
Dec-16
0%
5,000
Nov-16
400
Change %(RHS) 8%
Clinker Inventories('000 Ton)(LHS)
Oct-16
20%
500
6,000
Sep-16
600
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
700
-4%
Qassim Cement
-5%
200
Jun-17
-10%
May-17
0
Apr-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-60%
Sep-16
0
Aug-16
-40%
Jul-16
100
0%
400
Mar-17
-20%
5%
600
Feb-17
200
10%
800
Jan-17
0%
15%
Dec-16
300
20%
1,000
Nov-16
20%
Change %(RHS) 25%
Clinker Inventories('000 Ton)(LHS)
1,200
Oct-16
40%
400
1,400
Sep-16
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
500
-15%
Souhtern Cement 60%
3,000
600
40%
2,500
500
20%
400
0%
300
-20%
200
-40%
100
-60%
500
0
8-0%
0
Clinker Inventories('000 Ton)(LHS)
Change %(RHS)
30% 25% 20%
2,000
15%
1,500
10% 5%
1,000
0%
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
-5%
Jul-16
Jun-17
May-17
Apr-17
Change %(RHS)
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Aug-16
Jul-16
Sep-16
Dispatches ('000 Ton)(LHS)
700
-10%
Yanbu Cement Change %(RHS)
25% 20% 15%
3,000
10% 5%
2,000
0% -5%
1,000
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
-10% 0
Nov-16
-100%
Clinker Inventories('000 Ton)(LHS)
Oct-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-50%
Sep-16
200
Aug-16
0%
Jul-16
400
0
5
50%
4,000
Sep-16
600
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
800
-15%
Source: Yamamah Cement Company, AlJazira Research
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Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
Please read Disclaimer on the back
Dispatches & Change Arabian Cement
40%
-20%
0
-40%
Jun-17
100
May-17
0%
Apr-17
20%
200
Mar-17
300
Feb-17
-100%
60%
400
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
100
80%
Dec-16
-50%
100%
500
Nov-16
200
Change %(RHS)
600
Oct-16
0%
Clinker Inventories('000 Ton)(LHS)
700
Sep-16
300
50%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
400
Eastern Co EasternCement Cement
-60%
Change %(RHS)
6% 4%
1,000
2%
500
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
0%
Nov-16
0
10% 8%
Oct-16
Jun-17
0
May-17
-40%
Apr-17
50
Mar-17
-20%
Feb-17
100
Jan-17
0%
Dec-16
150
Nov-16
1,500
Oct-16
2,000
20%
Sep-16
40%
200
Aug-16
250
Jul-16
Clinker Inventories('000 Ton)(LHS)
2,500
Sep-16
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
300
-2%
Najran Cement 3,500
60%
3,000
Jun-17
0
-5%
May-17
500
Apr-17
1,000
-60%
Mar-17
-40% -80%
0%
1,500
Feb-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
2,000
Jan-17
-20%
0%
10% 5%
Dec-16
100
Change %(RHS)
2,500
Nov-16
20%
Oct-16
40%
150
Clinker Inventories('000 Ton)(LHS)
Sep-16
200
80%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
250
-10%
Northern Cement
200
-80%
-10%
Jun-17
-60%
10% 0%
May-17
400
20%
Apr-17
-40%
30%
Mar-17
600
Feb-17
20% -
60% 40%
Jan-17
800
Dec-16
0%
Change %(RHS)
50%
Nov-16
20%
1,000
Clinker Inventories('000 Ton)(LHS)
Oct-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
1,200
Sep-16
100
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-20%
AlJouf Cement
6
400
50%
-20%
200
0%
-30%
Jun-17
100%
-10%
May-17
600
Apr-17
150%
0%
Mar-17
800
Feb-17
200%
10%
Jan-17
1,000
Dec-16
250%
20%
Nov-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
1,200
Oct-16
100
Change %(RHS)
1,400
30%
Sep-16
150
Clinker Inventories('000 Ton)(LHS)
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
200
300%
-50%
Source: Yamamah Cement Company, AlJazira Research
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Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
Please read Disclaimer on the back
Dispatches & Change Tabuk Cement
0%
400
-50%
Jun-17
May-17
Mar-17
0
Apr-17
200
Feb-17
-100%
50%
600
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-50%
100%
800
Dec-16
50
200% 150%
1,000
Nov-16
0%
Change %(RHS)
1,200
Oct-16
50%
100
Clinker Inventories('000 Ton)(LHS)
1,400
Sep-16
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-100%
City Co CityCement Cement 1,400
50%
1,000
10%
800
5%
600
0%
400
-5%
200
Jun-17
May-17
Mar-17
Apr-17
-10%
Feb-17
0
Jan-17
-100%
15%
Dec-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-50%
25% 20%
Nov-16
200
Change %(RHS) -
1,200
Oct-16
0%
Clinker Inventories('000 Ton)(LHS)
Sep-16
400
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS) 600
-15%
Hail Cement 2,500
40%
2,000
4%
Jun-17
0%
May-17
0
Apr-17
-60%
2%
Mar-17
500
Feb-17
-40%
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
6%
1,000
Dec-16
-20%
50
12% 8%
1,500
Nov-16
0%
Change %(RHS) RHS
10%
Oct-16
20%
Clinker Inventories('000 Ton)(LHS)
Sep-16
100
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-2%
Riyadh Cement
0%
1,500
-2% -4%
1,400
Jun-17
May-17
500
Apr-17
100%
-6%
Mar-17
1,300
Feb-17
-60%
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
-40%
2%
Dec-16
-20%
100
6% 4%
Nov-16
0%
200
Change %(RHS)
1,600
Oct-16
20%
Clinker Inventories('000 Ton)(LHS)
1,700
Sep-16
40%
300
0
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
400
-8%
Safwa Cement
7
0%
Jun-17
0
May-17
-60%
20%
100
Apr-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-40%
40%
200
Mar-17
-20%
50
60%
300
Feb-17
0%
100% 80%
Jan-17
100
20%
Change %(RHS)
400
Dec-16
150
40%
Nov-16
60%
Oct-16
200
Clinker Inventories('000 Ton)(LHS)
Sep-16
80%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
250
-20%
Source: Yamamah Cement Company, AlJazira Research
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RESEARCH DIVISION
Acting Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
Disclaimer The purpose of producing this report is to present a general view on the company/economic sector/economic subject under research, and not to recommend a buy/sell/hold for any security or any other assets. Based on that, this report does not take into consideration the specific financial position of every investor and/or his/her risk appetite in relation to investing in the security or any other assets, and hence, may not be suitable for all clients depending on their financial position and their ability and willingness to undertake risks. It is advised that every potential investor seek professional advice from several sources concerning investment decision and should study the impact of such decisions on his/her financial/legal/tax position and other concerns before getting into such investments or liquidate them partially or fully. The market of stocks, bonds, macroeconomic or microeconomic variables are of a volatile nature and could witness sudden changes without any prior warning, therefore, the investor in securities or other assets might face some unexpected risks and fluctuations. All the information, views and expectations and fair values or target prices contained in this report have been compiled or arrived at by Aljazira Capital from sources believed to be reliable, but Aljazira Capital has not independently verified the contents obtained from these sources and such information may be condensed or incomplete. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, completeness or correctness of the information and opinions contained in this report. Aljazira Capital shall not be liable for any loss as that may arise from the use of this report or its contents or otherwise arising in connection therewith. The past performance of any investment is not an indicator of future performance. Any financial projections, fair value estimates or price targets and statements regarding future prospects contained in this document may not be realized. The value of the security or any other assets or the return from them might increase or decrease. Any change in currency rates may have a positive or negative impact on the value/return on the stock or securities mentioned in the report. The investor might get an amount less than the amount invested in some cases. Some stocks or securities maybe, by nature, of low volume/trades or may become like that unexpectedly in special circumstances and this might increase the risk on the investor. Some fees might be levied on some investments in securities. This report has been written by professional employees in Aljazira Capital, and they undertake that neither them, nor their wives or children hold positions directly in any listed shares or securities contained in this report during the time of publication of this report, however, The authors and/or their wives/children of this document may own securities in funds open to the public that invest in the securities mentioned in this document as part of a diversified portfolio over which they have no discretion. This report has been produced independently and separately by the Research Division at Aljazira Capital and no party (in-house or outside) who might have interest whether direct or indirect have seen the contents of this report before its publishing, except for those whom corporate positions allow them to do so, and/or third-party persons/institutions who signed a non-disclosure agreement with Aljazira Capital. Funds managed by Aljazira Capital and its subsidiaries for third parties may own the securities that are the subject of this document. Aljazira Capital or its subsidiaries may own securities in one or more of the aforementioned companies, and/or indirectly through funds managed by third parties. The Investment Banking division of Aljazira Capital maybe in the process of soliciting or executing fee earning mandates for companies that is either the subject of this document or is mentioned in this document. One or more of Aljazira Capital board members or executive managers could be also a board member or member of the executive management at the company or companies mentioned in this report, or their associated companies. No part of this report may be reproduced whether inside or outside the Kingdom of Saudi Arabia without the written permission of Aljazira Capital. Persons who receive this report should make themselves aware, of and adhere to, any such restrictions. By accepting this report, the recipient agrees to be bound by the foregoing limitations.
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Cement dispatches: A decline of 40.6%YoY for the month of June 2017 standing at 2.08mn tons comparing to 3.50 in June 2016; inventory levels showed an increase of 42.3%YoY. For 6M-2017 cement dispatches stood at 24.88mn ton compared to 31.71mn ton in 6M-2016, depicting a decline of 21.6%YoY. Despite the government’s decision to cut the export tariffs on cement export by 50%, we believe that this step is not enough to spur exporting activity by the local producers.
Change in Cement Dispatches
Source: Yamama Cement, AlJazira Capital
5,000
Change %(RHS)
Dispatches (1000 Ton)(LHS)
35%
4,500 4,000
15%
3,500
Cement dispatches declined by 53.9%MoM, standing at 2.08MT compared 4.51MT in May 2017, due to Ramadan season and
-5%
3,000
Eid holidays falling in the same month (June 2017).
2,500
-25%
Utilization Rate (TTM)
81.3%
79.8%
Saudi cement sector declined to 78.0%
76.7%
75.0%
68.3% in June 2017 compared 74.7%
to 84.2% in June 2016. 73.3%
71.9%
Change in Clinker Inventories
70.5%
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
70.0%
Jun-16
Jun-17
May-17
Apr-17
The total Utilization rate of
68.3%
Jun-17
82.5%
80.0%
65.0%
-45%
Source: Yamama Cement, AlJazira Capital
May-17
85.0% 84.2% 84.3% 83.6%
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
1,500
Jun-16
2,000
Source: Yamama Cement, AlJazira Capital
32,000
14% 12% 10%
29,000
8% 6%
26,000
4% 2%
23,000
Inventories
showed
an increase of 9.2%MoM and stood at 31.18MT compared to 28.47MT in May 2017.
Clinker Inventories(1000 Ton)(LHS)
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0%
Jun-16
20,000
Clinker
-2% -4%
Change %(RHS) Analyst
Waleed Al-jubayr
1
+966 11 2256146 [email protected]
© All rights reserved
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Cement Dispatches for June 2017
Source: Yamama Cement , AlJazira Capital
700
0.0%
AlSafwa cement showed the
500
-20.0%
least decline YoY of 5.9%. While,
600 400
-40.0%
300 200
-60.0%
0
-80.0%
June - 17
Umm AlQura
Hail
AlSafwa
AlJouf
Northern
City
YoY Change (%) -RHS
Cement Dispatches for 6M-2017
United Cement
June - 16
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
Yamamah
100
6.0%
3400 2850
-14.0%
2300 1750 1200
-34.0%
100
-54.0%
Sales / Production for 6M-2017
United Cement
Hail
AlSafwa
AlJouf
Northern
City
YoY Change (%) -RHS
Umm AlQura
6M-17
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
650
Yamamah
highest decline of 61.3%YoY, followed by Northern cement which showed a decline of 60.3%YoY.
Source: Yamama Cement , AlJazira Capital
3950
6M-16
Tabuk cement showed the
For 6M-2017, city cement was the only company to show growth in dispatches at 5%YoY. While Northern cement and Najran cement showed a decline of 51.7%YoY and 44.9%YoY respectively.
Source: Yamama Cement , AlJazira Capital
105.0% 100.0%
Northern
cement
and
Qassim cement showed the highest
95.0%
sales
/
production
Sales / Production
Clinker Inventories
460.0% 400.0% 340.0% 280.0% 220.0% 160.0% 100.0% 40.0%
4000 3000 2000
2
Hail
United Cement
YoY Change (%) -RHS
AlSafwa
AlJouf
Northern
City
Najran
Riyadh
Tabuk
Jun-17
Umm AlQura
Jun-16
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
Yamamah
1000
© All rights reserved
respectively. hand,
AlJouf
On
the
cement
other and
United cement showed a sales/ production ratio of 96.3%.
Source: Yamama Cement , AlJazira Capital
5000
0
United Cement
Umm AlQura
Hail
AlSafwa
AlJouf
Northern
City
Najran
Riyadh
Tabuk
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
90.0%
Yamamah
ratio of 101.7% and 101.3%
-20.0%
AlSafwa cement showed the highest increase of 280.6%YoY in its inventories level, followed by AlJouf cement which showed an increase of 273.4%YoY. On the other hand, Riyadh cement showed a decline of 6.6%YoY.
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Market share
Source: Yamama Cement , AlJazira Capital
Market Share TTM
United Cement
Hail
YoY Change
Umm AlQura
Market Share Jun-17
AlSafwa
Northern
Tabuk
Southern
Saudi
Market Share Jun-16
AlJouf
-40.0%
City
-25.0%
1.0%
Najran
-10.0%
3.0%
Riyadh
5.0%
5.0%
Arabian
20.0%
7.0%
Yanbu
35.0%
9.0%
Qassim
11.0%
Eastern
50.0%
Yamamah
13.0%
Saudi and Southern cement recorded the highest market share of 12.0% and 11.0%, respectively, in June 2017. While Tabuk cement, recorded the lowest market share of 1.4%. AlSafwa cement showed the highest increase in its market share from 2.9% to 4.6%, while Tabuk cement showed a decline in its market share standing at 1.4% from 2.1% in June 2016.
Source: Yamama Cement , AlJazira Capital 2% 2%
2%
Southern
Yanbu
Saudi
3%
Yamamah
Qassim
Najran
AlSafwa
Umm AlQura
highest market share of 12.2% followed by Saudi cement with
7%
Tabuk
Hail
Yanbu cement recorded the
12%
5%
AlJouf
Northern
On TTM basis, Southern and
4%
Riyadh
Eastern
12%
4%
Arabian
City
3%
1%
United Cement
12%
market share of 12.0%.
7% 7%
EV / Ton (in ‘000 SAR)
10%
8%
Source: Bloomberg, Yamama Cement , AlJazira Capital
1000.0
Tabuk cement recorded the
800.0
highest EV/Ton of SAR 998.3,
600.0
followed by AlJouf cement with EV/Ton of SAR 977.8. On the
400.0
Hail
AlJouf
Northern
City
Najran
Tabuk
Sector EV/Ton
P/E & P/BV
2.75
20.00
2.25
P/E
© All rights reserved
P/BV
Umm AlQura
Hail
AlJouf
Northern
City
Najran
Tabuk
Arabian
Yanbu
Qassim
Eastern
Saudi
5.00
Southern
10.00
Yamamah
recorded the lowest EV/Ton of SAR 412.1.
Source: TADAWUL , AlJazira Capital
25.00
15.00
3
Umm AlQura
EV/Ton
Southern
Arabian
Yanbu
Qassim
Eastern
Saudi
other hand, Yamama cement Yamamah
200.0
Arabian Cement recorded the lowest P/E of 9.59x, followed by
1.75
Saudi cement with P/E of 9.63x.
1.25
On the other hand, Tabuk cement
0.75
recorded the highest P/E of
0.25
22.61x. AlJouf cement recorded the lowest P/BV of 0.64x, while Qassim cement recorded the highest P/BV of 2.52x.
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Company News & Events Company Name
Date of Announcement
Southern Cement
10-07-2017
Qassim Cement
05-07-2017
Yanbu Cement
02-07-2017
Corporate Event & Announcement
Southern Cement’s board of directors has recommended cash dividend of SAR 1.00 per share for 1H-2017.
Qassim Cement’s board of directors has recommended cash dividend of SAR 0.65 per share for 2Q-2017.
Yanbu Cement’s board of directors has recommended cash dividend of SAR 0.75 per share for 1H- 2017.
Tabuk cement announced that it started the commercial production for its second Tabuk Cement
22-06-2017
production line, but both production lines cannot be running together due to lack of fuel allocation.
Yamama Cement Co. signed an agreement with the National Commercial Bank Yamama Cement
20-06-2017
(NCB) and Samba Financial Group to increase secured facilities to SAR 3.6bn from SAR 1bn, and extend the maturity date to January, 2025.
Najran Cement’s board of directors approved to put on hold plans for setting up limited liability companies for mining and transport services. The establishment of Najran Cement
25-05-2017
the mining firm was postponed as the ministry of mineral resources has suspended issuance of new mining licenses until law amendments are finalized. Plans for the transport company were also shelved due to the current market conditions.
Hail Cement
16-05-2017
Hail Cement Co. has received a new cement export license, valid for one year, from Saudi Arabia’s Ministry of Commerce and Investment. Source: The Saudi Stock Exchange - Tadawul
4
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Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Dispatches & Change Yamama Cement
-2%
1,500 1,000
-4%
0
-8%
-6%
Jun-17
500
May-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-80%
Sep-16
0
Aug-16
-60%
Jul-16
100
0%
2,000
Apr-17
-40%
2%
2,500
Mar-17
200
4%
3,000
Feb-17
-20%
6%
3,500
Jan-17
0%
300
8%
4,000
Dec-16
20%
400
Change %(RHS) 10%
Clinker Inventories('000 Ton)(LHS)
4,500
Nov-16
40%
500
5,000
Oct-16
60%
Sep-16
Change %(RHS)
Aug-16
Dispatches ('000 Ton)(LHS)
Jul-16
600
Saudi Co SaudiCement Cement
1,000
-2%
0
Jun-17
-60%
0%
May-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
100
2,000
Apr-17
-40%
2%
Mar-17
200
4%
3,000
Feb-17
-20%
4,000
Jan-17
300
6%
Dec-16
0%
5,000
Nov-16
400
Change %(RHS) 8%
Clinker Inventories('000 Ton)(LHS)
Oct-16
20%
500
6,000
Sep-16
600
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
700
-4%
Qassim Cement
-5%
200
Jun-17
-10%
May-17
0
Apr-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-60%
Sep-16
0
Aug-16
-40%
Jul-16
100
0%
400
Mar-17
-20%
5%
600
Feb-17
200
10%
800
Jan-17
0%
15%
Dec-16
300
20%
1,000
Nov-16
20%
Change %(RHS) 25%
Clinker Inventories('000 Ton)(LHS)
1,200
Oct-16
40%
400
1,400
Sep-16
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
500
-15%
Souhtern Cement 60%
3,000
600
40%
2,500
500
20%
400
0%
300
-20%
200
-40%
100
-60%
500
0
8-0%
0
Clinker Inventories('000 Ton)(LHS)
Change %(RHS)
30% 25% 20%
2,000
15%
1,500
10% 5%
1,000
0%
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
-5%
Jul-16
Jun-17
May-17
Apr-17
Change %(RHS)
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Aug-16
Jul-16
Sep-16
Dispatches ('000 Ton)(LHS)
700
-10%
Yanbu Cement Change %(RHS)
25% 20% 15%
3,000
10% 5%
2,000
0% -5%
1,000
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
-10% 0
Nov-16
-100%
Clinker Inventories('000 Ton)(LHS)
Oct-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
-50%
Sep-16
200
Aug-16
0%
Jul-16
400
0
5
50%
4,000
Sep-16
600
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
800
-15%
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
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Dispatches & Change Arabian Cement
40%
-20%
0
-40%
Jun-17
100
May-17
0%
Apr-17
20%
200
Mar-17
300
Feb-17
-100%
60%
400
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
100
80%
Dec-16
-50%
100%
500
Nov-16
200
Change %(RHS)
600
Oct-16
0%
Clinker Inventories('000 Ton)(LHS)
700
Sep-16
300
50%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
400
Eastern Co EasternCement Cement
-60%
Change %(RHS)
6% 4%
1,000
2%
500
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
0%
Nov-16
0
10% 8%
Oct-16
Jun-17
0
May-17
-40%
Apr-17
50
Mar-17
-20%
Feb-17
100
Jan-17
0%
Dec-16
150
Nov-16
1,500
Oct-16
2,000
20%
Sep-16
40%
200
Aug-16
250
Jul-16
Clinker Inventories('000 Ton)(LHS)
2,500
Sep-16
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
300
-2%
Najran Cement 3,500
60%
3,000
Jun-17
0
-5%
May-17
500
Apr-17
1,000
-60%
Mar-17
-40% -80%
0%
1,500
Feb-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
2,000
Jan-17
-20%
0%
10% 5%
Dec-16
100
Change %(RHS)
2,500
Nov-16
20%
Oct-16
40%
150
Clinker Inventories('000 Ton)(LHS)
Sep-16
200
80%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
250
-10%
Northern Cement
200
-80%
-10%
Jun-17
-60%
10% 0%
May-17
400
20%
Apr-17
-40%
30%
Mar-17
600
Feb-17
20% -
60% 40%
Jan-17
800
Dec-16
0%
Change %(RHS)
50%
Nov-16
20%
1,000
Clinker Inventories('000 Ton)(LHS)
Oct-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
1,200
Sep-16
100
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-20%
AlJouf Cement
6
400
50%
-20%
200
0%
-30%
Jun-17
100%
-10%
May-17
600
Apr-17
150%
0%
Mar-17
800
Feb-17
200%
10%
Jan-17
1,000
Dec-16
250%
20%
Nov-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
0
Jul-16
50
1,200
Oct-16
100
Change %(RHS)
1,400
30%
Sep-16
150
Clinker Inventories('000 Ton)(LHS)
40%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
200
300%
-50%
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for June 2017 July 2017 Saudi Cement Sector | Monthly Report | June 2017
Please read Disclaimer on the back
Dispatches & Change Tabuk Cement
0%
400
-50%
Jun-17
May-17
Mar-17
0
Apr-17
200
Feb-17
-100%
50%
600
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-50%
100%
800
Dec-16
50
200% 150%
1,000
Nov-16
0%
Change %(RHS)
1,200
Oct-16
50%
100
Clinker Inventories('000 Ton)(LHS)
1,400
Sep-16
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-100%
City Co CityCement Cement 1,400
50%
1,000
10%
800
5%
600
0%
400
-5%
200
Jun-17
May-17
Mar-17
Apr-17
-10%
Feb-17
0
Jan-17
-100%
15%
Dec-16
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-50%
25% 20%
Nov-16
200
Change %(RHS) -
1,200
Oct-16
0%
Clinker Inventories('000 Ton)(LHS)
Sep-16
400
100%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS) 600
-15%
Hail Cement 2,500
40%
2,000
4%
Jun-17
0%
May-17
0
Apr-17
-60%
2%
Mar-17
500
Feb-17
-40%
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
6%
1,000
Dec-16
-20%
50
12% 8%
1,500
Nov-16
0%
Change %(RHS) RHS
10%
Oct-16
20%
Clinker Inventories('000 Ton)(LHS)
Sep-16
100
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
150
-2%
Riyadh Cement
0%
1,500
-2% -4%
1,400
Jun-17
May-17
500
Apr-17
100%
-6%
Mar-17
1,300
Feb-17
-60%
Jan-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
-40%
2%
Dec-16
-20%
100
6% 4%
Nov-16
0%
200
Change %(RHS)
1,600
Oct-16
20%
Clinker Inventories('000 Ton)(LHS)
1,700
Sep-16
40%
300
0
60%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
400
-8%
Safwa Cement
7
0%
Jun-17
0
May-17
-60%
20%
100
Apr-17
Jun-17
May-17
Apr-17
Mar-17
Feb-17
Jan-17
Dec-16
Nov-16
Oct-16
Sep-16
Aug-16
Jul-16
0
-40%
40%
200
Mar-17
-20%
50
60%
300
Feb-17
0%
100% 80%
Jan-17
100
20%
Change %(RHS)
400
Dec-16
150
40%
Nov-16
60%
Oct-16
200
Clinker Inventories('000 Ton)(LHS)
Sep-16
80%
Aug-16
Change %(RHS)
Jul-16
Dispatches ('000 Ton)(LHS)
250
-20%
Source: Yamamah Cement Company, AlJazira Research
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RESEARCH DIVISION
Acting Head of Research
RESEARCH DIVISION
BROKERAGE AND INVESTMENT CENTERS DIVISION
Talha Nazar
Sultan Al Kadi, CAIA
Analyst
Jassim Al-Jubran
+966 11 2256250 [email protected]
+966 11 2256374 [email protected]
Analyst
Analyst
Waleed Al-jubayr
Muhanad Al-Odan
+966 11 2256146 [email protected]
+966 11 2256115 [email protected]
General Manager – Brokerage Services &
AGM-Head of international and institutional
AGM- Head of Western and Southern Region Investment
sales
brokerage
Centers
Alaa Al-Yousef
Luay Jawad Al-Motawa
Mansour Hamad Al-shuaibi
+966 11 2256060 [email protected]
+966 11 2256277 [email protected]
AGM-Head of Sales And Investment Centers
AGM-Head of Qassim & Eastern Province
+966 11 2256248 [email protected]
+966 12 6618443 [email protected]
Central Region
Sultan Ibrahim AL-Mutawa
Abdullah Al-Rahit
+966 11 2256364 [email protected]
+966 16 3617547 [email protected]
AlJazira Capital, the investment arm of Bank AlJazira, is a Shariaa Compliant Saudi Closed Joint Stock company and operating under the regulatory supervision of the Capital Market Authority. AlJazira Capital is licensed to conduct securities business in all securities business as authorized by CMA, including dealing, managing, arranging, advisory, and custody. AlJazira Capital is the continuation of a long success story in the Saudi Tadawul market, having occupied the market leadership position for several years. With an objective to maintain its market leadership position, AlJazira Capital is expanding its brokerage capabilities to offer further value-added services, brokerage across MENA and International markets, as well as offering a full suite of securities business. 1.
RATING TERMINOLOGY
Analyst
2. 3. 4.
Overweight: This rating implies that the stock is currently trading at a discount to its 12 months price target. Stocks rated “Overweight” will typically provide an upside potential of over 10% from the current price levels over next twelve months. Underweight: This rating implies that the stock is currently trading at a premium to its 12 months price target. Stocks rated “Underweight” would typically decline by over 10% from the current price levels over next twelve months. Neutral: The rating implies that the stock is trading in the proximate range of its 12 months price target. Stocks rated “Neutral” is expected to stagnate within +/- 10% range from the current price levels over next twelve months. Suspension of rating or rating on hold (SR/RH): This basically implies suspension of a rating pending further analysis of a material change in the fundamentals of the company.
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