In its report, TAIB said the company's stock is trading at a P/E multiple of 10.06x and 10.28x on 2010E and 2011E, and at a P/BV multiple of 1.70x and 1.63x on 2010E and 2011E BVPS, respectively. Meanwhile, the stock has declined 15.5 percent since the beginning of the year as against an increase of 5.3 percent registered by the Tadawul All-Share Index (TASI). Considering the above factors, TAIB has arrived at a price target of SR43.15, with an upside of 5.2 percent from the closing price of SR41 (as of Nov. 10, 2010).

Accordingly, TAIB has reiterated its earlier Neutral recommendation on Yanbu Cement.

YCC reported total revenues of SR683.1 million during nine months of this year, down 9.3 percent from SR753 million.

Net profit fell 17.4 percent to SR330.8 million from SR400.5 million.

TAIB has maintained its sales estimate for 2010. However, TAIB’s net profit estimate stands 2.7 percent lower, on anticipation of higher operating costs.

YCC’s revenues for the first nine months fell 9.3 percent to SR683.1 million from SR753.0 million, weighed down by a steep fall in average price realized and cement sales.

Cost of sales (CoS) increased marginally to SR254.3 million from SR254.2 million. However, as a percentage of revenues, CoS expanded 346 bps to 37.2 percent from 33.8 percent. Sales and distribution (S&D) expenses advanced 7.5 percent to SR6.97 million, up 16 bps to 1 percent as a percentage of revenues. Similarly, general and administrative (G&A) expenses jumped 12.7 percent to SR11.6 million.

Finance expenses plunged 64.7 percent to SR0.06 million from SR0.17 million.

YCC’s gross profit declined 14.0 percent to SR428.8 million due to lower revenues, resulting from increased competition from private cement manufacturers in Saudi Arabia. As a percentage of revenues, gross margin narrowed 346 bps to 62.8 percent, the TAIB report said. Profit from operations fell 18.1 percent to SR334.9 million in nine months from SR408.9 million. Operating margin contracted 527 bps to 49 percent. Non-operating income stood at SR7.1 million. Net profit attributable to equity shareholders declined 17.4 percent to SR330.8 million from SR400.5 million because of lower sales and the export ban. Adjusted annualized EPS dropped to SR4.2 from SR5.1, the TAIB report added.