        Net income: SAR107mn, -42% Y-o-Y, +23% Q-o-Q, -6% vs. EFGe
        Revenues: SAR319mn, -20% Y-o-Y, +27% Q-o-Q, +5% vs. EFGe
        Gross profit: SAR141mn, -36% Y-o-Y, +22% Q-o-Q, -4% vs. EFGe
        Net operating profit: SAR112mn, -42% Y-o-Y, +20% Q-o-Q, -7% vs. EFGe
 
Saudi Cement Company reported its 4Q17 highlights, showing net profit of SAR107mn (-42% Y-o-Y, +23% Q-o-Q), which came in marginally below our forecast of SAR115mn (-6%), despite revenue coming in ahead of our estimate. SCC reported revenue of SAR319mn (-20% Y-o-Y, +27% Q-o-Q), 5% ahead of our estimates, driven by both higher-than-expected sales volumes (-21% Y-o-Y, +23% Q-o-Q,+2% vs. EFGe) and selling prices (+1% Y-o-Y, +4% Q-o-Q,+3% vs. EFGe). However, higher-than-expected COGS (+1% Y-o-Y, +32% Q-o-Q,+15% vs. EFGe) and SG&A expenses (+10% Y-o-Y, +30% Q-o-Q, +8% vs. EFGe) affected margins and led to earnings miss, albeit marginally. Although earnings came short of our estimate, we are enthused by the improved cement prices and volumes Q-o-Q, which support our view that the cement sector has bottomed, and we expect it to stabilise over 2H18. Even though we are expecting SCC to be a key beneficiary of the recent export fee waiver, as it expects to regain its market share in Bahrain over the short term, the share price has rallied c30% over the past three months, and we believe the export growth potential has already priced in its current valuation (2018e P/E of 16.3x, EV/EBITDA is 11.8x, div. yield of 6.2%); hence, we currently have a Neutral rating on SCC. 
 
Saudi Cement: SAR51.22 as of 27 Feb. 2018, Rating: Neutral, TP: SAR54.50/share, MCap: USD2,090mn, SACCO AB/3030.SE

Sameer Kattiparambil

Dina Hicham