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CEMENTQassim CementAlso known asQCCPriceSR115.3Pricing / Valuation as on May 27, 2009Mkt capSR5.2bn ($1,384.8mn)Sh. outstanding45.0mnKey statistics52 week range H/L (SR) 188.3/73.0Avg daily turnover (mn) SR US$3m 11.54 3.0812m 13.74 3.67Raw Beta 6m 3yr0.78 1.01Reuters3040.SEBloombergQACCO ABPrice perform (%) 1M 3M 12MAbsolute (%) 2 41 (38)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www qcc com.saValuation multiples2006 2007 2008P/E (x) 22.1 15.1 7.0P/B (x) 5.4 5.3 2.1P/Sales (x) 12.8 9.6 4.4Div yield (%) 3.0 3.5 9.9Qassim Cement Company (QCC) was founded in 1976 in Buraydah, which lies in thecentral region of KSA, 330 km northwest of Riyadh. Commercial production startedin 1981 with the opening of a 2,000 tonnes per day clinker facility. In 2008, QCCproduced 3.22 mn tonnes of cement and 3.38 mn tonnes of clinker.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 494 543 847 820 (3.2) 18.4EBITDA SRmn 329 365 609 597 (1.9) 22.0Net Income SRmn 282 316 540 517 (4.4) 22.4Assets SRmn 1,631 1,755 2,059 2,270 10.2 11.7Equity SRmn 1,188 1,295 1,523 1,724 13.1 13.2Total Debt SRmn 219 219 242 244 0.5 3.6Cash & Equiv SRmn 196 224 207 336 62.5 19.7EBITDA Mgn % 66.7 67.1 71.9 72.8 - -Net Mgn % 57.0 58.1 63.8 63.0 - -ROE % 24.5 25.4 38.3 31.8 - -ROA % 20.6 18.6 28.3 23.9 - -Div Payout % 73.5 65.6 52.5 69.6 - -EPS SR 31.3 7.0 12.0 11.5 (4.4) -BVPS SR 132.0 28.8 33.9 38.3 13.1 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCement Production 100.0 100.0 Saudi Arabia 100.0 100.0Weightage (%)TASI (free float weight) 0.63MSCI Saudi (domestic – mid cap) 7.02Free float (%)Free float 53.94Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)20015010050Qassim Cement (RHS)Public Investment Fund 23.3General Organization for Social 17.5Insurance (GOSI)Public Pension Authority (PPA) 5.0-Source: Company, NCBC ResearchBusiness brief: QCC has held a steady share in the domestic cement market for manyyears. In 2008, the company accounted for 10% of the total cement sales in the Kingdomfrom 9.1% in 2005. Of late, QCC had started exporting some of its products to theneighboring countries. However, the ban on cement exports, implemented in 2008, islikely to impact company’s export revenuesFinancials: In 2008, the company’s sales decreased 3.2% y-o-y to SR 820.2 mn in linewith the sluggish revenue outlook in the industry. Company’s’ total sale volumes fell 7.6%y-o-y to 3.2mn tonnes in 2008. Net income margin declined by 80 basis points to 63% y-oydue to poor sales performanceRecent developments: In April 2009, QCC announced a 5.4% y-o-y decline in Q109 netprofits to SR151.5mn mainly due to decline in the cement prices. QCC’s proposal ofbuilding a new gypsum plant in the Al Asyah area was rejected by Al Asyah Municipality inSeptember 2007. The council had voted unanimously against granting the license as theplant is too close to residential area and could cause health problemsSource: NCBC ResearchJUNE 2009QASSIM CEMENT COMPANY141