• Net profit increased by 16.9%YoY in 2010
• Operating margins improve to 52.4% in 2010
• Dividend payout increase to SAR4.0 per share
• Ability to charge premium prices; the key advantage

Strong 4Q10 performance in a difficult environment
Despite the fact that the bulk of the demand growth is being absorbed by the new players, Yamama cement net profit increased by 10.2%YoY in 4Q10 to SAR159.4mn. Though cement dispatches declined by 4.5%YoY to 1.35mn tons in 4Q10, increase in realization prices by 5.5%YoY to SAR233.5 per ton supported profitability growth. The results were also 9.4% higher than our estimate of SAR146.2mn.

Valuation update
We have upgraded our fair value slightly by 0.9% to SAR58.8 in light of our revised forecasts. However, we downgrade our recommendation to HOLD from BUY. The stock has witnessed a rally of 7.5% since Qatar won the world cup 2022 bid on 2 December 2010.

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