Undervalued Small-Cap Cement Plays in the Middle East: Why YAMAMA Cement and Qassim Cement Are Attractive Long-Term Bets

The Middle East cement sector is undergoing a transformative phase, driven by Saudi Arabia's Vision 2030 initiatives and a surge in infrastructure development. Amid this growth, two small-cap players-YAMAMA Cement and Qassim Cement-stand out as compelling long-term investments. Their strategic alignment with regional economic tailwinds, improving financial health, and proactive sustainability efforts position them to capitalize on a market projected to grow at a robust pace over the next decade.

Earnings Momentum and Financial Resilience

YAMAMA Cement has demonstrated strong earnings momentum in 2025, with revenue rising 27.5% year-over-year to SAR1.02 billion in the first nine months of the year. While Q3 results showed a dip in net income (SAR35.87 million vs. SAR97.93 million in the prior year), this was attributed to rising financing expenses amid higher sales volumes. Notably, the company's operating income increased slightly to SAR315.21 million, reflecting operational efficiency despite margin pressures. YAMAMA's net debt-to-equity ratio remains at 37.4%, and its EBIT coverage of interest payments stands at 9.7 times, indicating solid liquidity and debt management capabilities.

Qassim Cement, meanwhile, has secured a 10% domestic market share in Q2 2024, selling 1.06 million tonnes of cement. The company's recent $298 million contract with Sinoma International Engineering to build a fourth production line in Buraydah City underscores its commitment to modernizing operations and reducing costs. This project, aligned with Vision 2030's sustainability goals, will replace outdated infrastructure with energy-efficient technology, enhancing long-term profitability.

Strategic Alignment with Vision 2030 and Regional Growth

Saudi Arabia's cement market is forecasted to grow at a compound annual growth rate of 5.8% from 2024 to 2033, reaching USD 74.07 billion by 2033. This expansion is fueled by megaprojects such as NEOM, Riyadh Metro, and Qiddiya, which require massive cement consumption. Both YAMAMA and Qassim are adapting their logistics and production strategies to meet this demand. For instance, YAMAMA has introduced refuse-derived fuel into its kilns, reducing CO₂ emissions and aligning with the Saudi Green Initiative. Qassim's new production line similarly emphasizes energy efficiency, reflecting a sector-wide shift toward sustainability.

The eco-friendly cement market in Saudi Arabia is expected to grow at an even faster CAGR of 11.5% through 2033, driven by demand for sustainable infrastructure. Al Jouf Cement's green cement, which cuts CO₂ emissions by 30%, has already been approved for use in NEOM projects-a trend YAMAMA and Qassim are well-positioned to follow.

Debt Reduction and Creditworthiness

While specific credit ratings for YAMAMA and Qassim remain undisclosed, their financial metrics suggest prudent debt management. YAMAMA's net debt-to-equity ratio of 37.4% is well within conservative thresholds, and its interest coverage ratio of 9.7x indicates strong capacity to service debt. For Qassim, the $298 million investment in its Buraydah plant is a capital expenditure aimed at long-term efficiency gains rather than speculative expansion, reducing near-term debt risks.

Why These Stocks Are Undervalued

Despite their strong fundamentals, both companies trade at discounts relative to their growth potential. YAMAMA's earnings growth (65.1% year-to-date) and Qassim's market share gains suggest untapped value, particularly as infrastructure spending accelerates. Their alignment with Vision 2030 ensures sustained demand, while sustainability initiatives position them to benefit from the eco-friendly cement boom.

Conclusion

YAMAMA Cement and Qassim Cement represent rare opportunities in the Middle East's cement sector: small-cap plays with robust earnings momentum, disciplined debt management, and strategic alignment with Saudi Arabia's economic transformation. As Vision 2030 projects gain momentum and sustainability becomes a competitive differentiator, these companies are poised to deliver outsized returns for long-term investors.