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2310

Governance: A

SIPCHEM

Sahara International Petrochemical Co.

15.27 SAR / Share

As of: Mar 26, 2026

— P/E Ratio Trailing 12 Months

0.8x P/B Ratio Price to Book Value

6.5% Dividend Yield Annual Dividend / Share

11.07B SAR Market Cap Total Valuation

1.34 Beta Systematic Risk Index

-11.3% Net Margin Net Profit / Revenue

The Story

A diversified petrochemical leader currently weathering a cyclical downturn characterized by compressed margins and strategic asset restructuring.

Source: Annual 2025 (2026-03-26)

Value Creation +2.0% 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

6.5%

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

-889.3%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

-11.3%

ROIC Return on Invested Capital

11.0%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

—

P/B Ratio Market capitalization compared to corporate book value

0.8x

EV / EBITDA Operating multiple reflecting core operational leverage

45.4x

EV / SALES Asset pricing multiple relative to total topline revenue

1.9x

Growth Story

Revenue has faced a steady contraction, declining from 7.62 billion SAR in fiscal 2023 to 6.81 billion SAR in the TTM period ending December 2025. This trend is primarily driven by a decline in global sales prices for its core products and the strategic decision to cease operations at underperforming or damaged facilities, such as the ethyl acetate and EVA film plants. The company's 5-year average reinvestment rate of -80.79% and a negative sustainable growth rate of -8.89% reflect a period of consolidation and capital preservation rather than aggressive expansion, as the firm navigates a challenging macro environment for feedstocks.

Profitability Dynamics

While Sipchem has historically created value with a 5-year average ROIC of 11.01% exceeding its WACC of 9.03%, recent performance shows significant pressure. The TTM operating margin has dipped to -9.48%, resulting in an operating loss of 645 million SAR. This profitability crunch is attributed to the dual impact of rising feedstock costs and 300 million SAR in impairment losses recognized on property, plant, and equipment for the IDC and SCC units. Despite these headwinds, the company maintains a cash balance of 1.34 billion SAR, though the current negative NOPAT of 772 million SAR highlights the immediate challenge in generating positive cash flows from operations.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.34

Cost of Equity Minimum required rate of return demanded by shareholders

10.2%

WACC Weighted average cost of total debt and equity funding

9.0%

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

25.9%

Risk Factors

Sipchem’s risk profile is shaped by its high sensitivity to market cycles, reflected in a relevered beta of 1.34. The company faces significant operational risks, including the recent voluntary liquidation of its SSPC subsidiary following a fire incident and the temporary cessation of the ethyl acetate plant due to regulatory and economic alignment. While the total debt of 2.87 billion SAR is supported by a market capitalization of 11.07 billion SAR, the lack of interest coverage due to negative TTM EBIT represents a significant short-term risk. Business-specific risks are further compounded by the volatility of global commodity prices and feedstock supply costs.

Governance Disclosures

Rating: A

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

Significance: 3/10 Info Asymmetry

Establishment of Military Systems Joint Venture

The Group subsidiary SAT established Portsmouth Arabia Limited (PAL) in 2025 with foreign partners. The new entity is focused on specialized manufacturing, including military guidance systems and simulators.

Significance: 4/10 Entrenchment

Voluntary Liquidation of SSPC Subsidiary

Sipchem, acting as the ultimate shareholder, resolved to cease operations of its subsidiary SSPC following a 2022 fire incident. This led to a resolution for voluntary liquidation by SCC on November 30, 2025, with legal formalities currently in process.

Mitigating Factors: The liquidation follows a significant fire incident that damaged production and storage facilities.

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In-Depth Analysis