We review our coverage of the Oman Ceramic Sector with two companies –Al Anwar Ceramics Co. (AACT OM) and Al Maha Ceramics Co. (AMCI OM). We expect the Oman Ceramic sector to be under pressure led by the removal of anti-dumping duty by GCC and the imposition of customs duty by KSA. However, the underlying economic growth remains strong which will drive growth at a stable rate going forward. We have used a combination of different valuation methodologies (DCF (40% weightage), DDM (40%), and peer-group P/E (10%) and EV/EBITDA (10%) multiples).
Investment summary
1. The underlying Oman economy remains strong coupled with the construction of major projects to support local demand for ceramic tiles.
2. The removal of anti-dumping duty by GCC on cheaper tiles from India and China has increased competition and put pressure on prices in the sector.
3. Customs duty imposed by KSA, a major export destination, on tiles being imported from Oman, is creating a challenging situation for export revenue.