Oman Cement Co. -Equity Report -30-05-2012

Modest 8.5% increase in top line in 1Q12
Oman Cement Company (OCC) recorded a 8.6% increase in top line to OMR13.9mn as sales volume reflected positively. This resulted in a 23.9% increase in profits reaching OMR5.1mn as compared to OMR4.1mn registered in 1Q11. The increase has mirrored strongly in margins. Gross margins increased to 40.1% and net margins up by 450bps to 36.8% during the quarter. The increase can be attributed to the inauguration of its new clinker line which increased the capacity to 2.4mtpa. In addition to higher production and sales volume.

Valuation update
We have upgraded our fair value to OMR0.698/share after incorporating mproved cement demand forecast for 2012-15 in our model. Despite upgrading our fair value the recommendation has not changed due to 32.0% increase in share price in the last 3 months. Thus we maintain HOLD recommendation on the stock.