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2223

Governance: A

LUBEREF

Saudi Aramco Base Oil Co.

101.90 SAR / Share

As of: Mar 26, 2026

20.0x P/E Ratio Trailing 12 Months

3.7x P/B Ratio Price to Book Value

4.0% Dividend Yield Annual Dividend / Share

17.15B SAR Market Cap Total Valuation

1.08 Beta Systematic Risk Index

10.6% Net Margin Net Profit / Revenue

The Story

A high-return, cash-generative subsidiary of Saudi Aramco that dominates the regional base oil market while maintaining a net-cash balance sheet.

Source: Annual 2025 (2026-02-15)

Value Creation +20.3% 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

4.0%

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

+5.8%

Payout Ratio Percent of net profits distributed as dividends

80.3%

Net Margin Net profit margin generated from total operational revenue

10.6%

ROIC Return on Invested Capital

29.2%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

20.0x

P/B Ratio Market capitalization compared to corporate book value

3.7x

EV / EBITDA Operating multiple reflecting core operational leverage

14.9x

EV / SALES Asset pricing multiple relative to total topline revenue

2.1x

Growth Story

Luberef is currently navigating a period of revenue consolidation, with TTM revenue of 8.1 billion SAR compared to 10.0 billion SAR in fiscal 2024. This trend reflects the cyclical nature of global petroleum product pricing. The company’s sustainable growth rate is technically negative at -4.57%, driven by a five-year average reinvestment rate of -15.6%. This indicates a strategic choice to prioritize capital returns to shareholders over aggressive top-line expansion. While the company continues to invest in refinery enhancements and development—evidenced by 444 million SAR in TTM capital expenditure—its primary growth capacity is anchored in optimizing existing high-value output rather than rapid volume increases.

Profitability Dynamics

The company is a premier value creator, evidenced by a massive 20.6% spread between its five-year average ROIC of 29.2% and its WACC of 8.56%. Despite the recent revenue contraction, Luberef maintains efficient operations with a TTM operating margin of 11.0% and a profit margin of 10.6%. This efficiency allows the company to generate substantial cash flows, supporting significant dividend distributions such as the 518 million SAR final dividend for 2024 and the 168 million SAR interim dividend paid in late 2025. The business model effectively converts raw feedstock into high-margin specialized products with minimal capital friction.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.08

Cost of Equity Minimum required rate of return demanded by shareholders

9.0%

WACC Weighted average cost of total debt and equity funding

8.9%

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

5.5%

Risk Factors

Luberef’s risk profile is characterized by high customer concentration and commodity sensitivity, with approximately 36% of revenue derived from sales to Saudi Aramco. However, this is balanced by an exceptionally strong balance sheet. The company maintains a negative gearing ratio of -10%, as its cash reserves of 987 million SAR exceed its total debt of 949 million SAR. While the company faces long-term decommissioning obligations for its refineries and is subject to the volatility of the SIBOR and SOFR rates on its variable-rate Murabaha facilities, its net-cash position and robust interest coverage provide a significant buffer against financial distress.

Governance Disclosures

Rating: A

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

Significance: 3/10 Asset Risk

Employee Loan and Home Ownership Programs

The company provides interest-free loans to eligible Saudi employees for home ownership and other purposes. As of year-end 2025, the total balance of these loans was SAR 20.53 million. Home loans are secured by the title of the property, while other loans are secured against the employees' end-of-service benefits.

Mitigating Factors: Home loans are collateralized by property with a fair value higher than the loan balance, and other loans are limited to 80% of accrued end-of-service benefits.

Significance: 4/10 Tunneling

Key Management and Board Remuneration

Total compensation for key management personnel in 2025 was SAR 51.29 million, comprising SAR 46.79 million in short-term benefits and SAR 4.51 million in employee benefit obligations. Board of Directors' fees for meeting attendance totaled SAR 4.19 million.

Mitigating Factors: Remuneration is disclosed as being for the purpose of attending Board meetings and standard KMP compensation.

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In-Depth Analysis