Cement Dispatches for March 2018 - Aljazira Capital
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
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Cement dispatches: Cement dispatches for the month of March-2018 stood at 4.20mn tons, compared to 4.71mn tons in March-2017, depicting a decline of 10.9%YoY. Clinker inventory showed an increase of 23.2%YoY, remaining stable on monthly basis. For 3M-2018, Cement dispatches stood at 11.91mn tons compared to 13.64mn tons in 2017, depicting a decline of 12.7%. Sales / clinker production ratio stood at 103.5% for the month, where Tabuk cement registered the highest ratio at 278.8%. Change in Cement Dispatches
Source: Yamama Cement, AlJazira Capital Change %(RHS)
Dispatches (1000 Ton)(LHS)
5,000
80%
Cement dispatches showed
2,500
-20%
2,000
-40%
1,500
-60%
72.8%
70.0%
Mar-18
monthly
basis,
on
the
10.9%YoY is attributed to continued pressure on sector fundamentals.
The total Utilization rate of Saudi
71.4% 69.2%
69.4%
cement sector declined to 64.6%
68.7%
68.1%
67.6%
67.0%
66.6%
65.0%
in March 2018 compared to 65.5%
65.5%
Feb-18
74.3%
an increase of 15.6% on
Source: Yamama Cement, AlJazira Capital
Jan-18
75.0%
Jan-18
Nov-17
Utilization Rate (TTM)
Feb-18
in demand. The decline of
Dec-17
0%
Oct-17
3,000
Sep-17
back of seasonal up tick
Aug-17
20%
Jul-17
3,500
Jun-17
40%
May-17
4,000
Apr-17
60%
Mar-17
4,500
64.6%
75.6% in March 2017.
Change in Clinker Inventories
Mar-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
55.0%
Mar-17
60.0%
Source: Yamama Cement, AlJazira Capital
36,500
10% 8% 6%
31,000
4% 2%
25,500
Clinker Inventories remained flat on monthly basis, standing at 35.63MT.
0%
Total Invetories (1000 Ton)(LHS)
1
Change %(RHS)
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
20,000
Mar-17
-2% -4%
Analyst
Waleed Al-jubayr +966 11 2256146 [email protected]
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Mar-18 - LHS
Northern
AlJouf
Umm AlQura
Hail
cement
of 42.4%YoY and 29.3%YoY, respectively. On the other hand, Yamama cement showed the highest decline of 50.5%YoY, with decline of 42.8%YoY.
Hail
AlJouf
Northern
Tabuk
United Cement
AlSafwa
Najran
Riyadh
30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0%
For 3M-2018, Hail cement showed the highest increase of 24.7%, followed by Umm AlQura cement with increase of 19.8%. While Riyadh cement and Yamama cement showed a decline of 40.8%YoY and 40.0%YoY respectively.
Source: Yamama Cement , AlJazira Capital
Tabuk and Najran cement showed the highest cement sales / clinker
250.0%
production ratio of 278.8% and
200.0%
177.6% respectively. On the other
150.0%
hand, Eastern cement and Umm
100.0%
Eastern
Umm AlQura
Yamama
AlJouf
Northern
Hail
Southern
Saudi
AlSafwa
Qassim
Riyadh
Arabian
United Cement
Yanbu
City
Najran
Tabuk
AlQura cement showed a cement
200.0%
4500
150.0%
3750
100.0%
3000 2250
50.0%
1500
0.0%
Mar-18 - LHS
YoY Change (%) -RHS
United Cement
City
AlSafwa
Arabian
Umm AlQura
Riyadh
Northern
AlJouf
Tabuk
Qassim
Hail
Eastern
Najran
Southern
Yanbu
Saudi
Yamama
750
© All rights reserved
64.6% and 67.0% respectively.
Source: Yamama Cement , AlJazira Capital
5250
Mar-17 - LHS
sales/ clinker production ratio of
Sales / Production
Clinker Inventories – March 2018
2
United
followed by Riyadh cement
300.0%
0
and
showed the highest increase
YoY Change (%) -RHS
3M-2018-LHS
Sales / Production for 3M-2018
50.0%
Hail
Source: Yamama Cement , AlJazira Capital
Eastern
City
Yamama
Qassim
Arabian
Southern
Saudi
Yanbu
3M-2017- LHS
45.0% 35.0% 25.0% 15.0% 5.0% -5.0% -15.0% -25.0% -35.0% -45.0% -55.0%
YoY Change (%) -RHS
Cement Dispatches for 3M-2018 1,600 1,400 1,200 1,000 800 600 400 200 0
Tabuk
Najran
AlSafwa
United Cement
Riyadh
Source: Yamama Cement , AlJazira Capital
Umm AlQura
Mar-17 - LHS
Eastern
City
Yamama
Arabian
Qassim
Saudi
Yanbu
550 500 450 400 350 300 250 200 150 100 50 0
Southern
Cement Dispatches for March 2018
Please read Disclaimer on the back
-50.0%
Arabian cement showed the highest increase of 196.1%YoY in its inventory level, followed by AlSafwa cement which showed an increase of 170.1%YoY. On the other hand, Riyadh and City cement showed a decline in the inventory level by 32.3%YoY and 24.9%YoY respectively.
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
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Market Share – March 2018
Source: Yamama Cement , AlJazira Capital Yanbu and Southern cement
14.0% 12.0% 10.0%
8.0% 6.0% 4.0%
Market Share March-17 - LHS
Northern
AlJouf
Umm AlQura
Hail
Market Share March-18 - LHS
Market Share TTM
YoY Change - RHS
recorded the highest market share, in March 2018, of 12.9% and 11.9%, respectively. While Northern cement, recorded the lowest market share of 2.7%. Yanbu cement increased its market share from 10.3% to 12.9%YoY, while Riyadh cement market share decline from 6.8% to 4.3%YoY.
Source: Yamama Cement , AlJazira Capital
Southern
Yanbu
Saudi
Yamama
Qassim
Arabian
City
Riyadh
2.4%
2.6%
3.0%
Yanbu cement recorded the
AlJouf
Umm AlQura
highest market share of 11.8%
11.5%
3.8%
Najran
On TTM basis, Southern and
11.8%
3.7%
AlSafwa
and 11.5% followed by Saudi
4.0% 4.8%
cement with market share of
11.1%
11.1%
5.3%
Hail
Northern
2.4%
2.8%
United Cement
Eastern
Tabuk
Najran
AlSafwa
United Cement
Riyadh
Eastern
City
Yamama
Arabian
Qassim
Saudi
Southern
0.0%
Yanbu
2.0%
3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0%
Tabuk
6.8%
8.2% 7.6%
EV / Ton (in ‘000 SAR)
8.2%
Source: Bloomberg, Yamama Cement , AlJazira Capital
1300.0
1150.0
AlJouf cement recorded the
1000.0
850.0
highest EV/Ton of SAR 1200.5,
700.0
followed by Saudi cement with
550.0
EV/Ton of SAR 1030.9; whereas
400.0 250.0
3.00
50.00
2.50
40.00
2.00
30.00
1.50
20.00
P/BV (RHS)
Najran
Tabuk
Hail
Northern
AlJouf
Yamama
City
Eastern
Saudi
Southern
Yanbu
Qassim
0.50
Umm AlQura
1.00
0.00
Arabian
10.00
P/E (LHS)
3
AlJouf
Saudi
Tabuk
Northern
Arabian
Qassim
Source: TADAWUL , AlJazira Capital. *Najran and Tabuk cement P/E are negative.
60.00
© All rights reserved
lowest EV/Ton of SAR 371.1.
Sector EV/Ton
EV/Ton
P/E & P/BV
Umm AlQura
Southern
Yanbu
Eastern
Hail
City
Yamama
Najran cement recorded the
Najran
100.0
Arabian Cement recorded the lowest P/E of 12.24x, followed by Umm AlQura cement with P/E of 13.34x. On the other hand, Hail cement recorded the highest P/E of 57.45x. Furthermore, Najran cement recorded the lowest P/ BV of 0.74x, while Saudi cement recorded the highest P/BV of 2.75x.
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
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Dispatches & Change Yamama Cement Dispatches ('000 Ton)(LHS)
600
Change %(RHS)
Change %(RHS)
35%
400
4%
4,000
2% 0%
3,000
300 -15%
200
-2%
2,000
-4%
1,000
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
Sep-17
Aug-17
Jul-17
Jun-17
-6%
May-17
0
Apr-17
-65%
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
100
8% 6%
5,000
500
0
Clinker Inventories('000 Ton)(LHS)
6,000
-8%
Saudi Co SaudiCement Cement
-15%
4,700 4,600
Mar-18
Feb-18
2,000
Jan-18
80%
Dec-17
4,400
Oct-17
4,500
-55%
Nov-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
4,800
Sep-17
-35%
100 0
4,900
Aug-17
200
5,000
5%
Jul-17
300
Change %(RHS)
5,100
Jun-17
25%
400
Clinker Inventories('000 Ton)(LHS)
5,200
May-17
500
45%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
600
6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5%
Qassim Cement
0
0%
Mar-18
-60%
Feb-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
0
Jan-18
-40%
50
5%
500
Nov-17
-20%
100
10%
Dec-17
0%
150
15%
1,000
Oct-17
20%
200
25% 20%
Sep-17
250
Change %(RHS)
1,500
Aug-17
40%
Jul-17
300
Jun-17
60%
May-17
350
Clinker Inventories('000 Ton)(LHS)
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
-5%
Souhtern Cement Dispatches ('000 Ton)(LHS)
600
Change %(RHS)
90%
Change %(RHS)
3,000
500 40%
400 300
-10%
200 100
10%
2,000
5%
1,500
0%
1,000
-5%
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
Sep-17
Aug-17
Jul-17
Jun-17
5,000
May-17
90%
Apr-17
0
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
-60%
20% 15%
2,500
500
Apr-17
0
Clinker Inventories('000 Ton)(LHS)
3,500
-10%
Yanbu Cement
4
Mar-18
-5%
Feb-18
0
Jan-18
-70%
Dec-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
100
0%
1,000
Oct-17
-30%
5%
2,000
Nov-17
200
10%
3,000
Sep-17
10%
Aug-17
300
20% 15%
Jul-17
400
Change %(RHS)
4,000
Jun-17
50%
May-17
500
Clinker Inventories('000 Ton)(LHS)
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
600
-10%
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Dispatches & Change Arabian Cement
40%
800
30%
600
20% 10%
400
0%
200
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
-10%
Aug-17
0
60% 50%
Jul-17
-75%
Change %(RHS)
1,000
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
0
Sep-17
-25%
Aug-17
100
Jul-17
25%
Jun-17
200
May-17
75%
Apr-17
300
Clinker Inventories('000 Ton)(LHS)
1,200
May-17
125%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
-20%
Eastern Co EasternCement Cement Change %(RHS)
6%
2,000
4%
1,500
2% 0%
1,000
-2%
500
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
-4%
Jul-17
0
10% 8%
2,500
Jun-17
Mar-18
Feb-18
Jan-18
-50%
Dec-17
0
Nov-17
-30%
Oct-17
50
Sep-17
-10%
Aug-17
100
Jul-17
10%
Jun-17
150
May-17
30%
Apr-17
200
Clinker Inventories('000 Ton)(LHS)
3,000
May-17
50%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
-6%
Najran Cement 55%
3,200
-2%
2,700
Mar-18
-6%
Feb-18
-4%
2,500
Jan-18
2,600
Nov-17
-65%
0%
2,800
Dec-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-45%
2%
2,900
Oct-17
50
4%
3,000
Sep-17
-25%
8% 6%
Aug-17
-5%
100
Change %(RHS)
3,100
Jul-17
15%
Clinker Inventories('000 Ton)(LHS)
Jun-17
35%
150
0
3,300
May-17
200
75%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
Northern Cement 60%
1,200
40%
1,000
20%
800
20%
0%
600
-20%
400
10%
-40%
200
-60%
0
40% 35% 30% 25% 15% 5% 0%
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
Jul-17
-5%
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
50
Change %(RHS)
1,400
May-17
100
Clinker Inventories('000 Ton)(LHS)
80%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
150
-10%
AlJouf Cement
5
Change %(RHS)
6%
-20%
-4%
-40%
950
-6%
Mar-18
-2%
1,000
Feb-18
0%
1,050
Jan-18
1,100
0%
Nov-17
20%
Dec-17
2%
Oct-17
1,150
Sep-17
4%
40%
Aug-17
1,200
Jul-17
60%
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
50
Clinker Inventories('000 Ton)(LHS)
1,250
May-17
100
80%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
150
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Dispatches & Change Tabuk Cement
2%
600
0%
400
-2%
200
Mar-18
Feb-18
Jan-18
-4%
Nov-17
0
Dec-17
-100%
4%
Oct-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-50%
6%
800
Sep-17
50
8%
1,000
Aug-17
0%
12% 10%
1,200
Jul-17
100
Change %(RHS)
1,400
Jun-17
50%
Clinker Inventories('000 Ton)(LHS)
1,600
May-17
100%
150
0
150%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
200
-6%
City Co CityCement Cement 20% 15%
1,000
10%
Mar-18
Nov-17
Feb-18
-15%
Jan-18
-10%
0
Dec-17
-5%
200
Oct-17
0%
400
Sep-17
5%
600
Aug-17
800
Jul-17
-70%
Change %(RHS)
1,200
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
0
Sep-17
-30%
Aug-17
100
Jul-17
10%
Jun-17
200
May-17
50%
Apr-17
300
Clinker Inventories('000 Ton)(LHS)
1,400
May-17
90%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
Hail Cement Dispatches ('000 Ton)(LHS)
140
Change %(RHS)
120
90%
Change %(RHS)
40%
80
6% 5%
2,000
4% 3%
1,500
60 -10%
40 20
2%
1,000
1% 0%
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
-1%
Apr-17
0
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
500 -60%
8% 7%
2,500
100
0
Clinker Inventories('000 Ton)(LHS)
3,000
-2%
Riyadh Cement
-6%
500
Mar-18
Jan-18
0
-8%
Feb-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
-55%
May-17
0
Apr-17
50
-35%
Dec-17
-15%
100
-4%
1,000
Nov-17
150
-2%
Oct-17
5%
2% 0%
Sep-17
200
Change %(RHS)
1,500
Aug-17
25%
Jul-17
250
Jun-17
45%
Clinker Inventories('000 Ton)(LHS)
2,000
May-17
300
65%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
350
-10%
Safwa Cement
700
25% 20% 15%
500
10%
400
5%
300
0%
200
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
-5%
Sep-17
-60%
30%
600
100 0
40% 35%
Aug-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-40%
Change %(RHS)
800
Jul-17
-20%
50
6
20% 0%
100
0
40%
900
Jun-17
150
Clinker Inventories('000 Ton)(LHS)
1,000
May-17
200
60%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
-10%
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
RESEARCH DIVISION
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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Aljazira Capital is a Saudi Investment Company licensed by the Capital Market Authority (CMA), license No. 07076-37
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Cement dispatches: Cement dispatches for the month of March-2018 stood at 4.20mn tons, compared to 4.71mn tons in March-2017, depicting a decline of 10.9%YoY. Clinker inventory showed an increase of 23.2%YoY, remaining stable on monthly basis. For 3M-2018, Cement dispatches stood at 11.91mn tons compared to 13.64mn tons in 2017, depicting a decline of 12.7%. Sales / clinker production ratio stood at 103.5% for the month, where Tabuk cement registered the highest ratio at 278.8%. Change in Cement Dispatches
Source: Yamama Cement, AlJazira Capital Change %(RHS)
Dispatches (1000 Ton)(LHS)
5,000
80%
Cement dispatches showed
2,500
-20%
2,000
-40%
1,500
-60%
72.8%
70.0%
Mar-18
monthly
basis,
on
the
10.9%YoY is attributed to continued pressure on sector fundamentals.
The total Utilization rate of Saudi
71.4% 69.2%
69.4%
cement sector declined to 64.6%
68.7%
68.1%
67.6%
67.0%
66.6%
65.0%
in March 2018 compared to 65.5%
65.5%
Feb-18
74.3%
an increase of 15.6% on
Source: Yamama Cement, AlJazira Capital
Jan-18
75.0%
Jan-18
Nov-17
Utilization Rate (TTM)
Feb-18
in demand. The decline of
Dec-17
0%
Oct-17
3,000
Sep-17
back of seasonal up tick
Aug-17
20%
Jul-17
3,500
Jun-17
40%
May-17
4,000
Apr-17
60%
Mar-17
4,500
64.6%
75.6% in March 2017.
Change in Clinker Inventories
Mar-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
55.0%
Mar-17
60.0%
Source: Yamama Cement, AlJazira Capital
36,500
10% 8% 6%
31,000
4% 2%
25,500
Clinker Inventories remained flat on monthly basis, standing at 35.63MT.
0%
Total Invetories (1000 Ton)(LHS)
1
Change %(RHS)
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
20,000
Mar-17
-2% -4%
Analyst
Waleed Al-jubayr +966 11 2256146 [email protected]
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Mar-18 - LHS
Northern
AlJouf
Umm AlQura
Hail
cement
of 42.4%YoY and 29.3%YoY, respectively. On the other hand, Yamama cement showed the highest decline of 50.5%YoY, with decline of 42.8%YoY.
Hail
AlJouf
Northern
Tabuk
United Cement
AlSafwa
Najran
Riyadh
30.0% 20.0% 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% -50.0%
For 3M-2018, Hail cement showed the highest increase of 24.7%, followed by Umm AlQura cement with increase of 19.8%. While Riyadh cement and Yamama cement showed a decline of 40.8%YoY and 40.0%YoY respectively.
Source: Yamama Cement , AlJazira Capital
Tabuk and Najran cement showed the highest cement sales / clinker
250.0%
production ratio of 278.8% and
200.0%
177.6% respectively. On the other
150.0%
hand, Eastern cement and Umm
100.0%
Eastern
Umm AlQura
Yamama
AlJouf
Northern
Hail
Southern
Saudi
AlSafwa
Qassim
Riyadh
Arabian
United Cement
Yanbu
City
Najran
Tabuk
AlQura cement showed a cement
200.0%
4500
150.0%
3750
100.0%
3000 2250
50.0%
1500
0.0%
Mar-18 - LHS
YoY Change (%) -RHS
United Cement
City
AlSafwa
Arabian
Umm AlQura
Riyadh
Northern
AlJouf
Tabuk
Qassim
Hail
Eastern
Najran
Southern
Yanbu
Saudi
Yamama
750
© All rights reserved
64.6% and 67.0% respectively.
Source: Yamama Cement , AlJazira Capital
5250
Mar-17 - LHS
sales/ clinker production ratio of
Sales / Production
Clinker Inventories – March 2018
2
United
followed by Riyadh cement
300.0%
0
and
showed the highest increase
YoY Change (%) -RHS
3M-2018-LHS
Sales / Production for 3M-2018
50.0%
Hail
Source: Yamama Cement , AlJazira Capital
Eastern
City
Yamama
Qassim
Arabian
Southern
Saudi
Yanbu
3M-2017- LHS
45.0% 35.0% 25.0% 15.0% 5.0% -5.0% -15.0% -25.0% -35.0% -45.0% -55.0%
YoY Change (%) -RHS
Cement Dispatches for 3M-2018 1,600 1,400 1,200 1,000 800 600 400 200 0
Tabuk
Najran
AlSafwa
United Cement
Riyadh
Source: Yamama Cement , AlJazira Capital
Umm AlQura
Mar-17 - LHS
Eastern
City
Yamama
Arabian
Qassim
Saudi
Yanbu
550 500 450 400 350 300 250 200 150 100 50 0
Southern
Cement Dispatches for March 2018
Please read Disclaimer on the back
-50.0%
Arabian cement showed the highest increase of 196.1%YoY in its inventory level, followed by AlSafwa cement which showed an increase of 170.1%YoY. On the other hand, Riyadh and City cement showed a decline in the inventory level by 32.3%YoY and 24.9%YoY respectively.
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Market Share – March 2018
Source: Yamama Cement , AlJazira Capital Yanbu and Southern cement
14.0% 12.0% 10.0%
8.0% 6.0% 4.0%
Market Share March-17 - LHS
Northern
AlJouf
Umm AlQura
Hail
Market Share March-18 - LHS
Market Share TTM
YoY Change - RHS
recorded the highest market share, in March 2018, of 12.9% and 11.9%, respectively. While Northern cement, recorded the lowest market share of 2.7%. Yanbu cement increased its market share from 10.3% to 12.9%YoY, while Riyadh cement market share decline from 6.8% to 4.3%YoY.
Source: Yamama Cement , AlJazira Capital
Southern
Yanbu
Saudi
Yamama
Qassim
Arabian
City
Riyadh
2.4%
2.6%
3.0%
Yanbu cement recorded the
AlJouf
Umm AlQura
highest market share of 11.8%
11.5%
3.8%
Najran
On TTM basis, Southern and
11.8%
3.7%
AlSafwa
and 11.5% followed by Saudi
4.0% 4.8%
cement with market share of
11.1%
11.1%
5.3%
Hail
Northern
2.4%
2.8%
United Cement
Eastern
Tabuk
Najran
AlSafwa
United Cement
Riyadh
Eastern
City
Yamama
Arabian
Qassim
Saudi
Southern
0.0%
Yanbu
2.0%
3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0%
Tabuk
6.8%
8.2% 7.6%
EV / Ton (in ‘000 SAR)
8.2%
Source: Bloomberg, Yamama Cement , AlJazira Capital
1300.0
1150.0
AlJouf cement recorded the
1000.0
850.0
highest EV/Ton of SAR 1200.5,
700.0
followed by Saudi cement with
550.0
EV/Ton of SAR 1030.9; whereas
400.0 250.0
3.00
50.00
2.50
40.00
2.00
30.00
1.50
20.00
P/BV (RHS)
Najran
Tabuk
Hail
Northern
AlJouf
Yamama
City
Eastern
Saudi
Southern
Yanbu
Qassim
0.50
Umm AlQura
1.00
0.00
Arabian
10.00
P/E (LHS)
3
AlJouf
Saudi
Tabuk
Northern
Arabian
Qassim
Source: TADAWUL , AlJazira Capital. *Najran and Tabuk cement P/E are negative.
60.00
© All rights reserved
lowest EV/Ton of SAR 371.1.
Sector EV/Ton
EV/Ton
P/E & P/BV
Umm AlQura
Southern
Yanbu
Eastern
Hail
City
Yamama
Najran cement recorded the
Najran
100.0
Arabian Cement recorded the lowest P/E of 12.24x, followed by Umm AlQura cement with P/E of 13.34x. On the other hand, Hail cement recorded the highest P/E of 57.45x. Furthermore, Najran cement recorded the lowest P/ BV of 0.74x, while Saudi cement recorded the highest P/BV of 2.75x.
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Dispatches & Change Yamama Cement Dispatches ('000 Ton)(LHS)
600
Change %(RHS)
Change %(RHS)
35%
400
4%
4,000
2% 0%
3,000
300 -15%
200
-2%
2,000
-4%
1,000
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
Sep-17
Aug-17
Jul-17
Jun-17
-6%
May-17
0
Apr-17
-65%
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
100
8% 6%
5,000
500
0
Clinker Inventories('000 Ton)(LHS)
6,000
-8%
Saudi Co SaudiCement Cement
-15%
4,700 4,600
Mar-18
Feb-18
2,000
Jan-18
80%
Dec-17
4,400
Oct-17
4,500
-55%
Nov-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
4,800
Sep-17
-35%
100 0
4,900
Aug-17
200
5,000
5%
Jul-17
300
Change %(RHS)
5,100
Jun-17
25%
400
Clinker Inventories('000 Ton)(LHS)
5,200
May-17
500
45%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
600
6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5%
Qassim Cement
0
0%
Mar-18
-60%
Feb-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
0
Jan-18
-40%
50
5%
500
Nov-17
-20%
100
10%
Dec-17
0%
150
15%
1,000
Oct-17
20%
200
25% 20%
Sep-17
250
Change %(RHS)
1,500
Aug-17
40%
Jul-17
300
Jun-17
60%
May-17
350
Clinker Inventories('000 Ton)(LHS)
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
-5%
Souhtern Cement Dispatches ('000 Ton)(LHS)
600
Change %(RHS)
90%
Change %(RHS)
3,000
500 40%
400 300
-10%
200 100
10%
2,000
5%
1,500
0%
1,000
-5%
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
Sep-17
Aug-17
Jul-17
Jun-17
5,000
May-17
90%
Apr-17
0
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
-60%
20% 15%
2,500
500
Apr-17
0
Clinker Inventories('000 Ton)(LHS)
3,500
-10%
Yanbu Cement
4
Mar-18
-5%
Feb-18
0
Jan-18
-70%
Dec-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
100
0%
1,000
Oct-17
-30%
5%
2,000
Nov-17
200
10%
3,000
Sep-17
10%
Aug-17
300
20% 15%
Jul-17
400
Change %(RHS)
4,000
Jun-17
50%
May-17
500
Clinker Inventories('000 Ton)(LHS)
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
600
-10%
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Dispatches & Change Arabian Cement
40%
800
30%
600
20% 10%
400
0%
200
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
-10%
Aug-17
0
60% 50%
Jul-17
-75%
Change %(RHS)
1,000
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
0
Sep-17
-25%
Aug-17
100
Jul-17
25%
Jun-17
200
May-17
75%
Apr-17
300
Clinker Inventories('000 Ton)(LHS)
1,200
May-17
125%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
-20%
Eastern Co EasternCement Cement Change %(RHS)
6%
2,000
4%
1,500
2% 0%
1,000
-2%
500
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
-4%
Jul-17
0
10% 8%
2,500
Jun-17
Mar-18
Feb-18
Jan-18
-50%
Dec-17
0
Nov-17
-30%
Oct-17
50
Sep-17
-10%
Aug-17
100
Jul-17
10%
Jun-17
150
May-17
30%
Apr-17
200
Clinker Inventories('000 Ton)(LHS)
3,000
May-17
50%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
-6%
Najran Cement 55%
3,200
-2%
2,700
Mar-18
-6%
Feb-18
-4%
2,500
Jan-18
2,600
Nov-17
-65%
0%
2,800
Dec-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-45%
2%
2,900
Oct-17
50
4%
3,000
Sep-17
-25%
8% 6%
Aug-17
-5%
100
Change %(RHS)
3,100
Jul-17
15%
Clinker Inventories('000 Ton)(LHS)
Jun-17
35%
150
0
3,300
May-17
200
75%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
Northern Cement 60%
1,200
40%
1,000
20%
800
20%
0%
600
-20%
400
10%
-40%
200
-60%
0
40% 35% 30% 25% 15% 5% 0%
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
Jul-17
-5%
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
50
Change %(RHS)
1,400
May-17
100
Clinker Inventories('000 Ton)(LHS)
80%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
150
-10%
AlJouf Cement
5
Change %(RHS)
6%
-20%
-4%
-40%
950
-6%
Mar-18
-2%
1,000
Feb-18
0%
1,050
Jan-18
1,100
0%
Nov-17
20%
Dec-17
2%
Oct-17
1,150
Sep-17
4%
40%
Aug-17
1,200
Jul-17
60%
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
0
Apr-17
50
Clinker Inventories('000 Ton)(LHS)
1,250
May-17
100
80%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
150
Source: Yamamah Cement Company, AlJazira Research
© All rights reserved
Cement Dispatches for March 2018 April 2018 Saudi Cement Sector | Monthly Report | March 2018
Please read Disclaimer on the back
Dispatches & Change Tabuk Cement
2%
600
0%
400
-2%
200
Mar-18
Feb-18
Jan-18
-4%
Nov-17
0
Dec-17
-100%
4%
Oct-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-50%
6%
800
Sep-17
50
8%
1,000
Aug-17
0%
12% 10%
1,200
Jul-17
100
Change %(RHS)
1,400
Jun-17
50%
Clinker Inventories('000 Ton)(LHS)
1,600
May-17
100%
150
0
150%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
200
-6%
City Co CityCement Cement 20% 15%
1,000
10%
Mar-18
Nov-17
Feb-18
-15%
Jan-18
-10%
0
Dec-17
-5%
200
Oct-17
0%
400
Sep-17
5%
600
Aug-17
800
Jul-17
-70%
Change %(RHS)
1,200
Jun-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
0
Sep-17
-30%
Aug-17
100
Jul-17
10%
Jun-17
200
May-17
50%
Apr-17
300
Clinker Inventories('000 Ton)(LHS)
1,400
May-17
90%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
400
Hail Cement Dispatches ('000 Ton)(LHS)
140
Change %(RHS)
120
90%
Change %(RHS)
40%
80
6% 5%
2,000
4% 3%
1,500
60 -10%
40 20
2%
1,000
1% 0%
Mar-18
Feb-18
Jan-18
Nov-17
Dec-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
-1%
Apr-17
0
Mar-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
500 -60%
8% 7%
2,500
100
0
Clinker Inventories('000 Ton)(LHS)
3,000
-2%
Riyadh Cement
-6%
500
Mar-18
Jan-18
0
-8%
Feb-18
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
-55%
May-17
0
Apr-17
50
-35%
Dec-17
-15%
100
-4%
1,000
Nov-17
150
-2%
Oct-17
5%
2% 0%
Sep-17
200
Change %(RHS)
1,500
Aug-17
25%
Jul-17
250
Jun-17
45%
Clinker Inventories('000 Ton)(LHS)
2,000
May-17
300
65%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
350
-10%
Safwa Cement
700
25% 20% 15%
500
10%
400
5%
300
0%
200
Mar-18
Feb-18
Jan-18
Dec-17
Oct-17
Nov-17
-5%
Sep-17
-60%
30%
600
100 0
40% 35%
Aug-17
Mar-18
Feb-18
Jan-18
Dec-17
Nov-17
Oct-17
Sep-17
Aug-17
Jul-17
Jun-17
May-17
Apr-17
-40%
Change %(RHS)
800
Jul-17
-20%
50
6
20% 0%
100
0
40%
900
Jun-17
150
Clinker Inventories('000 Ton)(LHS)
1,000
May-17
200
60%
Apr-17
Change %(RHS)
Mar-17
Dispatches ('000 Ton)(LHS)
250
-10%
Source: Yamamah Cement Company, AlJazira Research
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RESEARCH DIVISION
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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