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2282

Governance: D

NAQI

Naqi Water Co.

53.50 SAR / Share

As of: May 28, 2026

— P/E Ratio Trailing 12 Months

3.9x P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

1.07B SAR Market Cap Total Valuation

0.65 Beta Systematic Risk Index

-0.1% Net Margin Net Profit / Revenue

The Story

Naqi Water Company is transitioning from a highly profitable, pure-play water bottler into a diversified consumer goods player, navigating a temporary margin squeeze as it aggressively funds poultry and regional water expansions.

Source: Q1 2026 (2026-05-13)

Value Creation +9.5% 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

-1.7%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

-0.1%

ROIC Return on Invested Capital

16.6%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

—

P/B Ratio Market capitalization compared to corporate book value

3.9x

EV / EBITDA Operating multiple reflecting core operational leverage

33.9x

EV / SALES Asset pricing multiple relative to total topline revenue

5.5x

Growth Story

Naqi's revenue has experienced a downward trend over the last few years, declining from 238.82 million SAR in FY 2023 to 219.34 million SAR in FY 2024, and further to 186.95 million SAR in FY 2025, before showing a modest recovery to 194.15 million SAR in the TTM period. This historical contraction is reflected in a negative 5-year average reinvestment rate of -10.51% and a negative sustainable growth rate of -1.74%. However, this historical trend does not fully capture the company's current pivot. Naqi is actively executing a massive capital expenditure program, with TTM capex reaching 43.79 million SAR. Footnotes reveal total capital commitments of 110.06 million SAR (with 57.97 million SAR still outstanding) dedicated to expanding water production lines in Riyadh (adding capacities of 52,000 and 100,000 bottles per hour) and scaling up its poultry and egg production facilities. This aggressive reinvestment represents a strategic attempt to reverse the recent revenue decline and build long-term growth capacity.

Profitability Dynamics

Historically, Naqi has been a highly efficient value creator, boasting a strong 5-year average ROIC of 16.60% against a WACC of 7.12%, yielding a positive value-creation gap of 9.48%. However, recent profitability has been severely compressed. Operating income plummeted from 46.44 million SAR in FY 2023 to 7.74 million SAR in FY 2025, with TTM EBIT recovering slightly to 8.45 million SAR, representing a thin operating margin of 4.35%. Net income has hovered near break-even, recording a slight loss of -0.11 million SAR in the TTM period compared to a net income of 42.95 million SAR in FY 2023. This margin erosion is driven by rising operating costs, including consumed raw materials and depreciation from newly capitalized assets like biological poultry assets and machinery. Despite the current profitability squeeze, the company's historical returns suggest that if the new Riyadh water lines and poultry expansions achieve optimal capacity utilization, Naqi has the structural potential to restore its value-creation spread.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.65

Cost of Equity Minimum required rate of return demanded by shareholders

7.1%

WACC Weighted average cost of total debt and equity funding

7.1%

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

0.3%

Risk Factors

Naqi carries minimal traditional debt, with its latest total debt of 3.28 million SAR consisting entirely of lease liabilities, resulting in a highly conservative leverage profile. This low debt level is reflected in a low relevered beta of 0.65, indicating low systemic market risk. However, the company faces significant liquidity and execution risks. The aggressive capital expansion program has drawn down cash reserves to 12.69 million SAR, while outstanding capital commitments remain high at 57.97 million SAR. To mitigate these cash flow pressures and support financial stability during this heavy investment phase, the company's major shareholders (holding 70% of the share capital) have agreed to waive 50% to 60% of their dividend entitlements for the 2026–2028 period. This shareholder support provides a crucial safety net as Naqi manages the operational risks of diversifying into the volatile poultry sector and scaling its new Riyadh factory.

Governance Disclosures

Rating: D

We track 12 key governance and oversight matters for this company in our database.

Significance: 7/10 Info Asymmetry

Concentration of Raw Material Purchases with Major Shareholder

The company purchased raw materials worth SAR 14,836,025 from its major shareholder, Seqa United Company, during the three-month period ended March 31, 2026. This represents approximately 76.3% of the company's total consumed raw materials of SAR 19,437,430 during the same period.

Mitigating Factors: Transactions with related parties primarily represent purchases of raw materials and the provision of services, which are conducted in accordance with agreed terms and are approved by management.

Significance: 7/10 Propping

Dividend Entitlement Waivers by Major Shareholders

The company's major shareholders, who collectively hold 70% of the share capital, waived 50%, 55%, and 60% of their respective dividend entitlements for the fiscal years 2026, 2027, and 2028. This waiver was executed to support and maintain the stability of the company's financial position in connection with the approved dividend distribution policy.

Mitigating Factors: The waiver is a voluntary unilateral action by the major shareholders to support the company's financial stability, which benefits minority shareholders.

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In-Depth Analysis