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Governance: A

MEPCO

Middle East Paper Co.

19.00 SAR / Share

As of: May 28, 2026

106.2x P/E Ratio Trailing 12 Months

1.0x P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

1.65B SAR Market Cap Total Valuation

1.52 Beta Systematic Risk Index

1.5% Net Margin Net Profit / Revenue

The Story

MEPCO is a vertically integrated paper and tissue manufacturer currently undergoing a multi-billion riyal capital expansion to diversify its product mix and increase capacity.

Source: Q1 2026 (2026-05-14)

Value Creation -2.5% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

—

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

+4.6%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

1.5%

ROIC Return on Invested Capital

6.1%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

106.2x

P/B Ratio Market capitalization compared to corporate book value

1.0x

EV / EBITDA Operating multiple reflecting core operational leverage

13.0x

EV / SALES Asset pricing multiple relative to total topline revenue

1.9x

Quality Radar

Where this company sits versus sector peers on observable fundamentals.

Percentiles are versus sector peers. Scores fill in as new annual filings are processed; “N/A” means not enough data yet.

Growth Story

Revenue reached 1,045.7 million SAR on a TTM basis, reflecting a stabilization following the 1,065.3 million SAR reported in fiscal 2024. The company is heavily focused on long-term capacity building, evidenced by a five-year average reinvestment rate of 75.13%. This capital is primarily directed toward two major projects: the PM5 production line, with an expected completion cost of 1,760 million SAR by 2027, and the TM6 tissue mill, budgeted at 350 million SAR for completion in 2026. While the current sustainable growth rate is calculated at 4.56%, the company's future capacity is anchored in these ongoing capital works in progress, which totaled 395.0 million SAR as of March 31, 2026, representing a significant increase from 256.4 million SAR at the start of the year.

Profitability Dynamics

MEPCO’s profitability reflects a transition period, with a TTM operating margin of 3.49% and a net profit margin of 1.48%. The company’s five-year average ROIC of 6.07% currently trails its WACC of 8.53%, resulting in a value creation gap of -2.46%. This performance follows a challenging fiscal 2024 where the company recorded a net loss of 77.5 million SAR. However, TTM EBIT has recovered to 36.5 million SAR, and NOPAT stands at 29.2 million SAR. Cash flow generation is currently impacted by heavy capital expenditures, with TTM Capex reaching 242.0 million SAR as the company prioritizes the construction of new manufacturing facilities over immediate free cash flow.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.52

Cost of Equity Minimum required rate of return demanded by shareholders

11.1%

WACC Weighted average cost of total debt and equity funding

8.5%

Debt-to-Equity Ratio Proportion of corporate funding financed by debt creditors

49.2%

Risk Factors

The company’s risk profile is characterized by high capital intensity and significant leverage, with total debt reaching 810.8 million SAR against a market capitalization of 1,646.7 million SAR. This sensitivity is reflected in a relevered beta of 1.52, indicating higher volatility relative to the broader market. Financial risks include the management of Islamic banking facilities (Tawarruq) and SIDF loans, which are subject to covenants and interest rate fluctuations, with average interest rates for long-term Islamic facilities at 6.46%. Additionally, the company faces business-specific risks related to the execution of its large-scale PM5 and TM6 projects, as well as geopolitical developments in the Middle East that could impact regional supply chains and operational costs.

Governance Disclosures

Rating: A

We track 4 key governance and oversight matters for this company in our database.

Significance: 3/10 Tunneling

Advances to Key Management Personnel

The Group has outstanding advances to key management personnel of SAR 800,920, down from SAR 1,226,250 in the prior year.

Significance: 4/10 Info Asymmetry

Raw Material Purchases from Affiliate

The Group purchased raw materials from its affiliate, Arabian Maize Company for Industry, totaling SAR 3,105,288 during the three-month period. The outstanding balance due to the affiliate was SAR 3,105,288.

Mitigating Factors: Transactions are conducted in the ordinary course of business.

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In-Depth Analysis