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IndexLevelChg%
Large Cap4,023 0.80
Med Cap3,850 0.49
Small Cap4,907 0.91
Micro Cap8,519 0.62

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Ticker Price Volume
GFH 0.46 3,578,848
BKSB 0.14 275,822
DSI 0.39 45,711,538
ALINMA 16.5 3,084,810
DAMAC 3.84 686,475
ALKHODARI 10.04 34,083
DANA 0.6 9,001,191

Saudi Ceramics Co.

Source: Al Rajhi Bank

Q1: better than it looks

Saudi Ceramics announced its Q1 preliminary results with robust top line growth of 14% year-year. We believe the major factor behind this growth is the utilization of the new tile plant. Contrary to our forecast, however, gross and net margins declined mainly due to prices decrease as well as the high interest costs. We view this decrease as temporary issue and expect margins to improve in the long run due to the expected change in product mix .Considering the full utilization of the fourth ceramic tile first commercial launch, strong growth in sales justifies the weak profit at this point. Therefore, we expect to marinally cut our forecasts but maintain our overweight rating.

Conclusion: We believe the major reason for the 14% y-y top line increase is the utilization of the first phase of the fourth ceramic tile plant. We suspect that the price decrease in some of the products mainly tiles squeezed margins. Also, high financial costs seem to have pressured bottom line. We expect to marginally cut our forecasts but maintain our overweight rating.

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