Qatar National Cement Company (Q.P.S.C.) manufactures and sells cement, washed sand, and other by-products in Qatar. It offers ordinary Portland cement, sulphate resistant cement, hydrated and calcined lime, Portland pulverized fuel ash cement, and calcium carbonate. The company was founded in 1965 and is headquartered in Doha, Qatar.

Qatar

Qatar National Cement Company (Q.P.S.C.)

Basic Materials

The company has a track record of regular dividend payments. It has paid dividends in each of the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has been outstanding and can be rated excellent compared to its peers. At the same time, the average five-year yield has been significantly higher and exceeded nearly all its peers. On average, the company pays dividends annually. 

QNCD.QA reported revenue of QAR 382mn in the last 12 months, down 4% from FY24. The dynamics of cash flow, as measure by free cash flow (FCF), were rather similar. EPS fell 12% from FY24 to QAR 0.22.

Over the last six months, the stock performance has varied, with an increase following a drop. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Within the past six months, its performance has trailed this peer group's by 2ppts and its growth decelerated by 5ppts in the past month. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is neither favourable nor unfavourable.

The company has reported good EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 21.1% in the last 12 months, a decline from 28.0% in FY23. 

Historically, QNCD.QA has reported very strong net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 36.5%, down from 44.5% in FY23. 

Qatar National Cement Company (Q.P.S.C.) reported a return on equity (RoE) of 4.7% in the last 12 months, down from 6.6% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 4.3% in the last 12 months, a decrease from 6.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) declined to 4.6%, below the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.7 in the past several years. This ratio implies a poor shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

QNCD.QA has poor trading liquidity. It will take at least a day or two for the average private investor to sell a common position under normal market conditions. Liquidity is usually quite stable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note robust profitability and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, negligible return on capital, and excessive margin volatility.

In highly turbulent market conditions, QNCD.QA is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, QNCD.QA is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

From both historical and forecast perspectives, the stock is overpriced compared to similar stocks. In particular, the stock is reasonably priced on P/E, 'expensive' on EV/EBITD. 

Qatar National Cement Company (Q.P.S.C.)

QAR 3.45

4

Qatar National Cement Company (Q.P.S.C.)

QAR 3.45

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

QAR 3.45

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