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1214

Governance: D

SHAKER

Al Hassan Ghazi Ibrahim Shaker Co.

14.78 SAR / Share

As of: May 28, 2026

12.7x P/E Ratio Trailing 12 Months

1.1x P/B Ratio Price to Book Value

2.8% Dividend Yield Annual Dividend / Share

1.00B SAR Market Cap Total Valuation

0.87 Beta Systematic Risk Index

5.6% Net Margin Net Profit / Revenue

The Story

Shaker is a prominent Saudi distributor and manufacturer of HVAC systems and home appliances, navigating a transition from historical capital-intensive structures to a more streamlined, multi-segment retail and project-based model.

Source: Q1 2026 (2026-05-13)

Value Creation -1.8% 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

2.8%

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

+12.1%

Payout Ratio Percent of net profits distributed as dividends

35.8%

Net Margin Net profit margin generated from total operational revenue

5.6%

ROIC Return on Invested Capital

5.5%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

12.7x

P/B Ratio Market capitalization compared to corporate book value

1.1x

EV / EBITDA Operating multiple reflecting core operational leverage

13.3x

EV / SALES Asset pricing multiple relative to total topline revenue

1.0x

Growth Story

Shaker's revenue trajectory shows a moderate consolidation, with TTM revenue reaching SAR 1,396.72 million, slightly up from SAR 1,394.97 million in FY 2025 but down from the SAR 1,415.91 million recorded in FY 2024. Despite this near-term top-line plateau, the company exhibits a high historical 5-year average reinvestment rate of 218.13%, reflecting significant capital allocation back into the business, including strategic acquisitions like obtaining a 90% controlling stake in Ajeek Maintenance Service Company. This aggressive reinvestment, combined with a 5-year average ROIC of 5.53%, yields a theoretical sustainable growth rate of 12.06%. However, the divergence between this theoretical capacity and actual recent revenue trends suggests that historical reinvestments have yet to fully translate into sustained top-line expansion, as the company balances its wholesale distribution with newer service-oriented segments.

Profitability Dynamics

Profitability at Shaker is characterized by tight margins and a historical struggle to outpace its cost of capital. The company's TTM operating margin stands at 6.13%, with a net profit margin of 5.64%, translating to a TTM EBIT of SAR 85.66 million and Net Income of SAR 78.80 million. Over the longer term, Shaker's 5-year average ROIC of 5.53% falls short of its estimated WACC of 7.32%, resulting in a negative value creation gap of -1.79%. This indicates that, historically, the business has not fully covered its risk-adjusted cost of capital. Nonetheless, recent periods show stable operating income, with FY 2025 operating income at SAR 88.38 million compared to SAR 82.17 million in FY 2024, supported by profitable contributions from its associate, LG Shaker, which contributed SAR 10.16 million in share of profit for the first quarter of 2026.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.87

Cost of Equity Minimum required rate of return demanded by shareholders

8.1%

WACC Weighted average cost of total debt and equity funding

7.3%

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

48.2%

Risk Factors

Shaker's risk profile is heavily tied to its working capital requirements and leverage structure. The company manages a substantial current working capital of SAR 971.10 million, driven by significant inventory levels, including gross finished goods of SAR 339.32 million as of March 31, 2026, and trade receivables of SAR 656.77 million, which require a SAR 49.12 million impairment allowance. To fund these operations, Shaker relies on bank borrowings, with latest total debt reaching SAR 482.10 million against a cash balance of SAR 90.54 million. This leverage is governed by bank covenants, including a debt-to-equity limit of 1.5:1, with the company's adjusted net debt-to-equity ratio reported at 109% as of March 31, 2026. Additionally, with a relevered beta of 0.873, the stock exhibits lower systemic volatility than the broader market, though it remains exposed to localized credit risks from its extensive supplier and customer networks.

Governance Disclosures

Rating: D

We track 10 key governance and oversight matters for this company in our database.

Significance: 4/10 Entrenchment

Employee Stock Ownership Plan (ESOP) for Senior Executives

The Company's shareholders approved the issuance of 1,110,000 ordinary shares to allocate to the employee share program for senior executives. Options were granted with an exercise price of SAR 3 to 5 (compared to a fair value of SAR 9.3 to 11 at grant date) and a vesting period of 3 years.

Mitigating Factors: The program was approved by the Company's shareholders, and the options vest subject to performance conditions and service constraints imposed by the Nomination and Remuneration Committee (NRC).

Significance: 7/10 Asset Risk

Parent Company Guarantees and Promissory Notes for Borrowings

All bank loans are secured by promissory notes signed by the parent company equal to the maximum facility amount, totaling SAR 1,332 million as of March 31, 2026. Additionally, corporate guarantees of the Group are provided for loans to subsidiaries.

Mitigating Factors: As of March 31, 2026, no breach of loan covenants was identified by the Group.

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In-Depth Analysis