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CEMENTYanbu CementAlso known asYCCPricePricing / Valuation as on May 27, 2009Mkt capSh. outstandingKey statisticsSR49.0SR5.1bn ($1,373.8mn)105.0mn52 week range H/L (SR) 83.3/34.2Avg daily turnover (mn) SR US$3m 7.17 1.9112m 6.22 1.66Raw Beta 6m 3yr0.92 0.79ReutersBloomberg3060.SEYNCCO ABPrice perform (%) 1M 3M 12MAbsolute (%) (0) 3 (40)Market (%) 6 32 (39)Sector (%) (6) 19 (44)Website: www.yanbucement.comValuation multiples2006 2007 2008P/E (x) 14.8 15.0 7.3P/B (x) 3.6 4.3 1.7P/Sales (x) 9.0 8.5 3.7Div yield (%) 6.2 5.3 10.3Weightage (%)TASI (free float weight) 0.61MSCI Saudi (domestic – mid cap) 6.96Free float (%)Free float 52.62Relative share price perf.11,0009,0007,0005,0003,000M ay-08 Aug-08 Nov-08 Feb-09 M ay-09TASITop 5 shareholders (%)10080604020-Yanbu Cement (RHS)Sulaiman Abdul Aziz Saleh Al Rajhi 23.7General Organization for Social 11.7Insurance (GOSI)Public Investment Fund 10.0Abdullah Abdul Aziz Saleh Al Rajhi 5.8Source: NCBC ResearchJeddah-based Yanbu Cement Company (YCC) was established in 1977 through aplant with an initial production capacity of 3,000 tonnes of clinker per day at RasBaridi near Yanbu on the west coast of Saudi Arabia. The company produced 4.3and 3.6 mn tonnes of cement and clinker respectively in 2008.Company financials2005 2006 2007 2008YoY(%)CAGR(%)(05-08)Net Revenues SRmn 779 843 1,171 1,094 (6.6) 12.0EBITDA SRmn 548 602 776 680 (12.4) 7.4Net Income SRmn 454 512 661 560 (15.3) 7.3Assets SRmn 2,243 2,250 2,563 2,600 1.4 5.0Equity SRmn 1,942 2,085 2,324 2,356 1.4 6.6Total Debt SRmn 114 15 19 14 (25.8) (50.6)Cash & Equiv SRmn 89 43 38 132 251.9 14.3EBITDA Mgn % 70.4 71.4 66.3 62.2 - -Net Mgn % 58.2 60.7 56.5 51.2 - -ROE % 22.9 25.4 30.0 23.9 - -ROA % 20.8 22.8 27.5 21.7 - -Div Payout % 92.6 92.2 79.5 75.0 - -EPS SR 21.6 4.9 6.3 5.3 (15.2) -BVPS SR 18.5 19.9 22.1 22.4 1.4 -Source: Company, NCBC ResearchSegment-wise business analysisProduct segment 2008 Geographic 2008%Rev % Net Inc Breakup %Rev % Net IncCement Manufacturing 100.0 100.0 Saudi Arabia 100.0 100.0Source: Company, NCBC Research• Business brief: YCC is engaged in the production and marketing of cement and itsderivatives. The company has been losing its position in the domestic cementmarket—it was the largest seller of cement in Saudi Arabia during 2003 and 2004.The Company’s market share, (in terms of sales volumes), in the domestic markethas slid to 14.4% in 2008 from 17.3% in 2007. YCC also has a subsidiary (Yanbu AlShuaiba Paper Products) that produces paper bags for the retail sales of cement.• Financials: Company’s cement sales declined 6.6% y-o-y to SR1,093.5 mn in 2008.This was mainly due to 7.6% y-o-y decline in the sales volumes to 4.3 mn tonnes.Consequently, EBITDA margin declined by 410 basis points to reach 62.2% in 2008.• Recent developments: In April 2009, YCC announced a 10% y-o-y decline in itsQ109 net profits to SR151.8mn mainly due to a decline in sales during the period. InJuly 2008, the company announced the expansion of clinker capacity by 3 mn ton onRed Sea coast with a total cost of SR1.7 bn ($453.3 mn). YCC signed a contractwith Sinoma of China for setting up the cement plant within 30 months. YCC hasalso entered into a contract with M/s Pillard of Germany to upgrade the burning andstorage systems of some of its old kilns.JUNE 2009YANBU CEMENT COMPANY142