Argaam has reported that Southern Cement Company’s [3050.SE] Board of Directors (BoD) has approved granting all of its Saudi Arabian employees a cost of living allowance worth SAR1,000 per month. The decision comes in line with a Royal Decree announced last Friday by King Salman to mitigate the current economic reforms effects.

Our view: Based on the employee data available and assuming company to pay this special allowance throughout 2018, we believe this would cost SPCC SAR10mn in FY18, which implies c2.8% of our net profit estimates.

Sameer Kattiparambil, Dina Hicham

Southern Cement: SAR49.14 as of 9 Jan. 2018, Rating: Neutral, TP: SAR45.24/share, MCap: USD1,835mn, SOCCO AB/3050.SE