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1304

Governance: C

ALYAMAMAH STEEL

Al Yamamah Steel Industries Co.

35.20 SAR / Share

As of: Mar 26, 2026

20.1x P/E Ratio Trailing 12 Months

2.7x P/B Ratio Price to Book Value

1.4% Dividend Yield Annual Dividend / Share

1.79B SAR Market Cap Total Valuation

1.61 Beta Systematic Risk Index

4.7% Net Margin Net Profit / Revenue

The Story

A diversified steel fabricator transitioning from traditional infrastructure to renewable energy components, currently navigating a recovery from historical volatility.

Source: Q1 2026 (2026-02-12)

Value Creation -6.7% 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

1.4%

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

+0.3%

Payout Ratio Percent of net profits distributed as dividends

28.6%

Net Margin Net profit margin generated from total operational revenue

4.7%

ROIC Return on Invested Capital

2.6%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

20.1x

P/B Ratio Market capitalization compared to corporate book value

2.7x

EV / EBITDA Operating multiple reflecting core operational leverage

13.8x

EV / SALES Asset pricing multiple relative to total topline revenue

1.4x

Growth Story

The company is currently a 'recovering athlete' finding its stride after a significant net loss in fiscal 2023. While revenue surged from 1.56 billion SAR in 2023 to 1.96 billion SAR in 2024, the momentum has slightly moderated, with TTM revenue standing at 1.89 billion SAR. The long-term growth capacity remains structurally constrained; a low 5-year average ROIC of 2.59% combined with a reinvestment rate of 11.23% yields a sustainable growth rate of just 0.29%. Future expansion is heavily anchored in the Al Yamamah Wind Energy Systems project, supported by a 170 million SAR SIDF loan, which represents a strategic pivot toward the renewable energy sector to offset the cyclicality of traditional steel products.

Profitability Dynamics

Al Yamamah is currently 'operating in the shadow' of its capital costs. The company’s 5-year average ROIC of 2.59% falls significantly short of its 8.93% WACC, resulting in a value-destructive gap of -6.34%. However, recent performance indicates a stabilization of margins, with a TTM operating margin of 7.97% and a net income of 88.8 million SAR. While the company has returned to profitability following the 165.1 million SAR loss in fiscal 2023, its ability to create consistent shareholder value is hampered by a high cost of equity at 10.67% and the capital-intensive nature of its manufacturing base, which requires significant working capital to maintain operations.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.61

Cost of Equity Minimum required rate of return demanded by shareholders

11.4%

WACC Weighted average cost of total debt and equity funding

9.3%

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

59.1%

Risk Factors

The company’s risk profile is defined by 'heavy metal and high concentration.' With total debt reaching 1.06 billion SAR, the group relies heavily on short-term banking facilities, which increased to 903 million SAR by December 2025 to fund working capital requirements. This leverage is compounded by a high relevered beta of 1.46, indicating significant sensitivity to broader market volatility. A critical business-specific risk is the extreme customer concentration, where only eight customers account for 56.8% of total sales. Furthermore, the reliance on variable-rate Sharia-compliant facilities exposes the group to interest rate fluctuations, while the expansion into wind energy introduces execution risks in a specialized industrial segment.

Governance Disclosures

Rating: C

We track 6 key governance and oversight matters for this company in our database.

Significance: 4/10 Entrenchment

Restructuring of Major Shareholder Ownership

A major shareholder, Al Muhanna Trading Company, which holds a 6.77% stake in the parent company, received regulatory approval to divide its entire shareholding equally between two individuals, Mr. Abdulrahman bin Abdullah Al Muhanna and Mr. Mohammed bin Abdullah bin Muhanna.

Mitigating Factors: The division of shares was approved by the Capital Market Authority.

Significance: 7/10 Info Asymmetry

Related-Party Sales and Purchase Transactions with Major Shareholders

The group conducted sales totaling approximately SAR 124.7 million during the three-month period ending December 31, 2025, with entities linked to major shareholders. Key counterparties include Abdul Qader Al-Muhaidib & Sons Company (SAR 51M sales), Al-Muhanna Trading Group (SAR 36.9M sales), and Al-Muhanna Trading Company (SAR 26M sales).

Mitigating Factors: Transactions are conducted according to agreed-upon terms and conditions approved by management and ratified by the General Assembly of Shareholders.

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In-Depth Analysis