JEDDAH: While Saudi Arabia’s massive initial public offering of oil producer Aramco has been dominating headlines in the kingdom for months, investors have been making a fortune in an obscure corner of the market: Cement producers.
The stocks have gained on increasing demand for the product driven by several tourism and entertainment projects that are key parts of Crown Prince Mohammed bin Salman’s plan to diversify the economy away from oil. The shares now may fully reflect the good news: The valuations of the five biggest players now are higher than the Saudi index’s and all but one stock is trading above the average target price set by analysts.“We think that the sector overall is mostly pricing in the future growth except some outliers,” said Abdulmalik Alsalem, an analyst at Al Rajhi Capital. “There might be some room for gains in Arabian Cement and Qassim Cement, while for others it is hard.
Cement production in the kingdom has been rising in the past three months, with output in October the highest in the past year.
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