Yamama Saudi Cement Company (YSCC)

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Global Research
Result Update
Equity – Saudi Arabia
Cement Sector
2 nd May, 2012
Yamama Saudi Cement Company (YSCC)
Market Data
Bloomberg Code:
YACCO AB
Reuters Code:
3020.SE
CMP (1 st May 2012): SAR 50.50
O/S (mn) 202.5
Market Cap (SAR mn): 10,226
Market Cap (USD mn): 2,727
P/E 2012e (x): 10.1
P/Bv 2012e (x): 2.9
Price Performance 1-Yr
High (SAR): 83.25
Low (SAR): 47.50
Average Volume: (000) 276.2
1m 3m 12m
Absolute (%) 1.4 2.4 32.9
Relative (%) 4.9 -11.7 19.8
Price Volume Performance
3,000
2,500
60
55
BUY
Target Price
SAR56.4
1Q12 net profit increases by 54.5%YoY
500,000 housing unit to be build in the Kingdom
Expanding its products through 20% stake in Yemeni cement company
Fair value upgraded; Recommendation upgraded to BUY
YSCC reaches record profits in 1Q12
Yamama Saudi Cement Company (YSCC) witnessed an impressive 54.5% increase in
1Q12 net profit to SAR277.6mn as compared to the same period a year ago. The profit
rose by 45.3% on a QoQ basis. Higher profits can be attributed to increasing local
dispatches and demand arising in the Kingdom. YSCC Cement has benefited from its
strategic location in the Central Province, and caters to large population in the Kingdom.
Construction sector growth is driven by the SAR690bn 2012-13 budget, which focuses on
the implementation of 500,000 housing units.
Largest producer in the Central region
Cement dispatches for Yamama for 1Q12 increased by 30.8% QoQ to 1,919mn tons.
Strong growth in cement dispatches reflected in strong growth in sales revenue which
increased by 33.1% QoQ to SAR491.6mn. Sales revenue was also supported by an
increase in average realization prices by 1.7% QoQ to SAR254 per ton. Among the
central region, Yamama posted the largest increase in production and sales, its market
share of production in the central region reached 41% in 1Q12 as compared to 36.9%
share during the same period a year ago. In addition it has a 41.7% share of the local
dispatches in the central region. Yamama benefits from the central region tremendously
as it caters the region that host the largest population in KSA.
2,000
1,500
1,000
50
45
40
Additional capacity to commence from 2015
Recently YSCC’s board of directors met and discussed the feasibility of replacing five of
Yamama old production lines with a single 10,000/tons of clinker per day line, the
company started checking for offers from specialized companies for the execution.
However, due to increasing demand company is thinking not to replace old lines and just
add the additional line which will boost capacity to 7.6mpta.
500
0
35
30
New investment in Yemen
In 2011, the company invested around SAR75mn to buy a 20% stake in Yemeni Saudi
Cement Company which has a facility in Adan, Yemen. The company has a production
capacity of 1.4mtpa. However, according to recent update the facility is currently un
operational due to the political situation in the country. Hence, we have not take this in our
forecasts.
Volume ('000)
Faisal Hasan, CFA
Head of Research
fhasan@global.com.kw
Tel.: (965) 2295-1270
Turki O. AlYaqout
Financial Analyst
tyaqout@global.com.kw
Tel.: (965) 2295-1295
Global Investment House
www.globalinv.net
SAR (YCC)
Healthy financial base
YSCC managed to witness a 13.5% increase in equity for 1Q12 to reach SAR3.5bn, in
addition to an healthy 10.3% increase in assets. Yamama’s debt/equity ratio is currently at
0.03x in 1Q12 and is expected to decrease to 0.01x in 2012. The company has a healthy
current and quick ratio of 4.7x and 4.4x respectively.
Revision in estimates
We have increased our 2012 sales forecast by 33.3% and increased our per ton cost by
17.7% as the company will be importing more clinker. Consequently, we have revised
upwards our 2012 net profit forecast to SAR1,017mn.

Global Research – Saudi Arabia
Yamama Saudi Cement Company (YSCC)
SAR mn
Earlier
Estimates
Revised
estimates Change %
Revenues 1,373 1,830 33.3%
Cost of sales (612) (721) 17.7%
Operating Profit 706 1,025 45.2%
Net Profit 705 1,017 44.1%
Source: Global Research
Valuation update
We have upgraded our fair value to SAR56.4/share after incorporating improved cement demand forecast for 2012-14 in our model. Our
recommendation has changed to a BUY. The stock at its current price of SAR50.50/share is trading at a discount of 11.7% to the fair
value. Thus, we upgrade our recommendation on the stock to BUY.
June – 2011 2

Ratio Analysis
Cash Flow
Balance Sheet
Income Statement
Global Research – Saudi Arabia
Yamama Saudi Cement Company (YSCC)
Financial Statements
(SAR mn) 2009 2010 2011 2012e 2013e 2014e 2015e
Revenue 1,163 1,272 1,442 1,830 1,882 1,893 1,931
Revenue growth 3.6% 9.4% 13.4% 26.9% 2.8% 0.6% 2.0%
Cost of sales (543) (560) (633) (721) (752) (757) (777)
Gross Profit 620 712 809 1109 1130 1136 1154
SG&A (46) (46) (59) (84) (91) (91) (93)
Operating profit 574 666 751 1,025 1,039 1,045 1,061
Financial charges (13) (6) (5) (1) - - -
Other income 19 22 18 26 29 30 31
Profit Before Taxation 580 682 764 1,049 1,068 1,075 1,092
Taxation (18) (25) (24) (33) (32) (32) (33)
Net Profit 562 657 740 1,017 1,036 1,043 1,059
Net profit growth -8.0% 16.9% 12.6% 37.4% 1.9% 0.6% 1.6%
Cash and Bank Balance 712 700 898 873 962 1,112 1,150
Receivables and Prepayments 236 245 301 401 464 519 661
Inventories 97 132 137 158 185 207 266
Other Current assets 6 24 21 23 26 28 31
Long-term investments 379 394 419 461 507 558 614
Capital work-in-progress 0.5 7.4 40.5 52.6 68.4 88.9 115.5
Deferred charges after amortization 27 19 23 21 20 19 18
Loans to affliated companies 4 - - - - - -
Net fixed assets 2,206 2,106 1,959 1,888 1,812 1,731 1,645
Total Assets 3,694 3,653 3,822 3,878 4,045 4,263 4,500
Accounts payables 59 61 103 89 72 52 32
Dues to shareholders 36 41 39 43 47 52 57
Other current liabilities 222 143 192 99 51 51 52
Long-term debt 267 190 48 - - - -
Employee end-of-service benefits 54 59 64 67 71 74 78
Share capital 1,350 1,350 1,350 2,025 2,025 2,025 2,025
Retained Earnings 542 550 565 559 571 588 620
Other reserves 1,163 1,258 1,460 996 1,208 1,421 1,636
Total Shareholders Equity 3,055 3,159 3,375 3,580 3,804 4,034 4,281
Total Equity & Liability 3,694 3,653 3,822 3,878 4,045 4,263 4,500
Cash Flow from Operating Activities 690 797 913 1,047 1,096 1,117 1,014
Cash Flow from Investing Activities (62) (123) (253) (124) (153) (161) (171)
Cash Flow from Financing Activities (543) (692) (623) (948) (854) (805) (805)
Change in Cash 85 (18) 38 (25) 89 150 37
Net Cash at End 728 700 66 873 962 1,112 1,150
Operating profit margin 49.3% 52.4% 52.0% 56.0% 55.2% 55.2% 55.0%
Net Profit Margin 48.3% 51.6% 51.3% 55.6% 55.1% 55.1% 54.9%
Return on Average Assets 15.4% 17.9% 19.8% 26.4% 26.2% 25.1% 24.2%
Return on Average Equity 19.1% 21.1% 22.6% 29.2% 28.1% 26.6% 25.5%
EV/ton (USD) 258.6 276.0 370.0 398.0 392.2 385.8 384.2
Quick ratio (x) 3.1 4.0 3.7 5.6 8.5 10.7 13.0
Debt / Equity (x) 0.14 0.08 0.06 0.01 0.00 0.00 0.00
Cash return as % of invested capital 15.6% 18.3% 19.7% 26.4% 25.6% 24.4% 23.5%
EV/EBITDA (x) 10.7 9.8 11.7 9.2 8.9 8.8 8.6
EV/Revenues (x) 5.3 5.1 6.1 5.1 4.9 4.8 4.7
FCF Yield 10.7% 10.6% 9.0% 8.9% 9.4% 9.5% 8.5%
EPS (SAR) 4.2 4.9 5.5 5.0 5.1 5.1 5.2
Book Value Per Share (SAR) 2.1 2.2 2.8 2.9 2.7 2.5 2.4
Market Price (SAR) * 47.4 51.5 70.0 50.5 50.5 50.5 50.5
Market Capitalization (SAR mn) 6,399 6,953 9,450 10,226 10,226 10,226 10,226
Dividend Yield 6.3% 7.8% 5.7% 7.9% 7.9% 7.9% 7.9%
P/E Ratio (x) 11.4 10.6 12.8 10.1 9.9 9.8 9.7
P/BV Ratio (x) 2.1 2.2 2.8 2.9 2.7 2.5 2.4
Source: Company Reports & Global Research
* Market price for 2012 and subsequent years as per closing prices on May 1st, 2012
May - 2012 3

Global Research – Saudi Arabia
Yamama Saudi Cement Company (YSCC)
Disclosure
The following is a comprehensive list of disclosures which may or may not apply to all our researches. Only the relevant
disclosures which apply to this particular research has been mentioned in the table below under the heading of disclosure.
Disclosure Checklist
Company
Recommendation
Bloomberg
Ticker
Reuters
Ticker Price Disclosure
Yamama Saudi Cement Company BUY YACCO AB 3020.SE SAR 50.5 1,10
1. Global Investment House did not receive and will not receive any compensation from the company or anyone else for the
preparation of this report.
2. The company being researched holds more than 5% stake in Global Investment House.
3. Global Investment House makes a market in securities issued by this company.
4. Global Investment House acts as a corporate broker or sponsor to this company.
5. The author of or an individual who assisted in the preparation of this report (or a member of his/her household) has a direct
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6. An employee of Global Investment House serves on the board of directors of this company.
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Global Research: Equity Ratings Definitions
Global Rating
Definition
STRONG BUY
BUY
HOLD
SELL
Fair value of the stock is >20% from the current market price
Fair value of the stock is between +10% and +20% from the current market price
Fair value of the stock is between +10% and -10% from the current market price
Fair value of the stock is < -10% from the current market price
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May - 2012 4

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