Saudi cement stocks shine as billion-dollar projects take off

The first phase of the Red Sea Project is scheduled for completion in 2022. (Supplied)

Saudi Arabia’s cement makers are making big gains on the Saudi Stock Exchange (Tadawul) thanks to higher prices and planned mega projects beginning to gain momentum.

City Cement, one of the top ten gainers on the Saudi Stock Exchange (Tadawul), is up 79 percent this year, followed by Yamama Cement and Qassim Cement, up 73 percent each.

The stocks of two of the country’s largest producers - Yanbu Cement and Saudi Cement Co – have gained about 44 percent apiece to Sunday’s close. The Tadawul benchmark index rose nearly 1 percent this year.

Investors are turning to cement making companies as prices bounce back from last year’s lows, ensuring the industry is becoming profitable again.

Cement, which was selling for 120 riyals per ton in mid-2018, is now priced at around 200 riyals per ton, said Sameer Kattiparambil from EFG Hermes.

“We expect prices to be more stable at this level,” said Kattiparambil, who added that he assumed “some of the mega projects they announced will start to move to the implementation phase.”

The Kingdom has announced a range of megaprojects including The Red Sea Project, which is a 28,000-kilometer luxury tourist destination; NEOM, a futuristic smart city in the Kingdom’s northwest corner; and luxury resort destination Amalaa, dubbed the ‘Riviera of the Mideast.’

This month, the cornerstone was laid for the $17 billion Diriyah Gate Project which plans to develop the 18th-century clay city of Diriyah, the capital of the first Saudi Arabian state, into a cultural and lifestyle tourism destination northwest of Riyadh.

These projects aim to attract tourists to Saudi Arabia in line with Vision 2030, the Kingdom’s comprehensive plan to transform economy and reduce its reliance on oil exports.

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Last Update: 13:59 KSA 16:59 - GMT 13:59
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