Southern Province Cement [3050.SE] (SPCC) announced that it has signed a deal with Peakward Enterprises Holdings, located in Hong Kong to export 1.5mn tonnes of clinker to Bangladesh. The contract will be valid starting 31 December until June 2020. The company also added that the financial impact  will be reflected in 2019 and 1H20 financials.  
 
Our view: we view the news positively as the exports would reduce clinker inventory (currently 3.8mn tonnes, equivalent to c9 months of clinker requirements). Although the news didn’t  provide financial details of the deal, we do not expect any significant profit from the deal as we would assume that the primary motive of these exports would be to reduce pressure on working capital and to limit further build-up of inventories, in our view.

Sameer Kattiparambil
 
Southern Cement: SAR36.85 as of 31 Dec. 2018, Rating: Neutral, TP: SAR41.10/share, MCap: USD1,376mn, SOCCO AB/3050.SE