GulfBase GCC Cap Indices
IndexLevelChg%
Large Cap3,912 -0.22
Med Cap3,902 0.08
Small Cap5,065 -0.07
Micro Cap8,584 0.50

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QNBK 143.8 312,074
SABIC 97.75 1,713,132
STC 67.25 110,859
ALMARAI 73 11,920
BCI 25.2 276,336
RIBL 10.35 460,608
ORDS 103.8 74,035

Market Review and Outlook

Source: NCB Capital

Saudi Macro and Equity Market

Despite Rising Sales, Profitability in Cement Strained

The Saudi market for cement was well supplied in FY09. The 12 local producing factories had a combined clinker capacity of 45.1 million tonnes, resulting in an attainable cement output of 47.2 million tonnes. Total cement sales increased by 15.1% to 37.85 million tonnes, easing the tight supply situation that has been persisting since 2006. Sales to the domestic market increased strongly by 22.9% to 36.71 million tonnes, absorbing nearly 97% of the Kingdom's total output. With capacity utilization rates reaching 80% by the end of 2009, Saudi authorities have lifted the ban on cement exports on the condition that local prices do not surpass SR200 per tonne. This will inevitably increase the percentage of production being exported. On the downside, the gains in capacity had lead to a 47% increase in combined clinker inventory. Furthermore, intense competition has weighed on prices and the profitability of domestic producers. The eight listed cement companies declared that net-earnings fell by 9.8% Y/Y to SAR 3, 615 million, while the weighted average net-profit per tone of cement sold, in both local and exports markets, declined by 17.1% to SAR114.52 per tonne. Going forward, demand stemming from capital investment expenditure plans announced in the 2010 budget (SAR260 billion) should reduce inventories and support prices.

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