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2340

Governance: A

ARTEX

ARTEX Industrial Investment Co.

10.13 SAR / Share

As of: May 28, 2026

34.5x P/E Ratio Trailing 12 Months

0.8x P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

823.06M SAR Market Cap Total Valuation

0.61 Beta Systematic Risk Index

4.4% Net Margin Net Profit / Revenue

The Story

ARTEX is navigating a delicate operational turnaround, moving from deep net losses in fiscal 2023 and fiscal 2024 to positive net income in fiscal 2025 and the TTM period, while managing significant legacy guarantee liabilities.

Source: Q1 2026 (2026-05-17)

Value Creation -13.2% 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

-0.1%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

4.4%

ROIC Return on Invested Capital

-4.5%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

34.5x

P/B Ratio Market capitalization compared to corporate book value

0.8x

EV / EBITDA Operating multiple reflecting core operational leverage

17.0x

EV / SALES Asset pricing multiple relative to total topline revenue

1.5x

Growth Story

ARTEX's revenue trajectory shows a gradual recovery, rising from 522,605,000 SAR in fiscal 2023 to 562,168,000 SAR in fiscal 2024, and peaking at 563,982,000 SAR in fiscal 2025, before settling slightly at 543,066,000 SAR for the TTM period. Despite this top-line stabilization, the company's long-term growth capacity remains constrained. This is reflected in a negative 5-year average ROIC of -4.53% and a low 5-year average reinvestment rate of 2.10%, culminating in a negative sustainable growth rate of -0.095%. The operational restructuring, such as the assignment of a lease and factory by its subsidiary National Spinning Company for 41 million SAR, highlights management's efforts to streamline operations and reallocate capital to more productive areas.

Profitability Dynamics

The profitability narrative of ARTEX is one of emerging recovery from severe distress. The company posted deep operating losses of -40,338,000 SAR in fiscal 2023 and -23,537,000 SAR in fiscal 2024, but successfully crossed into positive territory with an operating income of 8,801,000 SAR in fiscal 2025 and an EBIT of 10,855,000 SAR in the TTM period. This recovery is mirrored in its TTM operating margin of 2.00% and net profit margin of 4.39%, the latter supported by a net income of 23,842,000 SAR. However, historical value destruction remains evident: the company's 5-year average ROIC of -4.53% stands in stark contrast to its WACC of 8.65%, resulting in a negative value creation gap of -13.18%. Capital expenditures of 36,105,000 SAR in the TTM period demonstrate ongoing reinvestment, but sustained profitability is required to consistently cover its cost of capital.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.61

Cost of Equity Minimum required rate of return demanded by shareholders

6.9%

WACC Weighted average cost of total debt and equity funding

8.7%

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

1.3%

Risk Factors

While ARTEX's latest total debt of 11,101,000 SAR appears modest relative to its cash balance of 25,617,000 SAR and a robust working capital of 745,542,000 SAR, its risk profile is heavily dominated by off-balance-sheet and legacy liabilities. The company faces a severe financial strain from its 15% investment in Al-Reef Sugar Refining Company, which was fully impaired by 42 million SAR in fiscal 2024. More critically, the Saudi Industrial Development Fund (SIDF) enforced a guarantee, leading ARTEX to recognize a massive provision of 111,923,000 SAR for third-party guarantee liabilities and monitoring fees. The termination of a memorandum of understanding to offload these liabilities in late 2025 leaves the company fully exposed to this cash outflow risk. Additionally, the company's beta of 0.614 reflects moderate market sensitivity, but its operational risks remain elevated due to these legal and financial guarantees.

Governance Disclosures

Rating: A

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

Significance: 6/10 Entrenchment

Reclassification of Associate due to Common Control and Board Representation

The Group restated its prior period financial statements to reclassify its 27.027% investment in Red Sea Cables Company from FVOCI to an investment in an associate. The reassessment revealed that the Group exercises significant influence because both the Group and the investee are subject to common control by the same ultimate parent company, and there is shared representation on the board of directors.

Mitigating Factors: The investment is now correctly accounted for using the equity method in accordance with IAS 28, and prior periods have been restated to reflect this.

Significance: 5/10 Info Asymmetry

Related-Party Transactions with Al Abdullatif Furniture Company

The Group disclosed outstanding receivables of SR 54,343 thousand from Al Abdullatif Furniture Company, an entity related to a board director, as of March 31, 2026. During the three-month period ended March 31, 2026, the Group recorded sales and services rendered to this entity of SR 13,900 thousand, purchases of SR 438 thousand, and payments/repayments of SR 10,340 thousand.

Mitigating Factors: Management believes there are no indications of impairment in the value of the balances due as of March 31, 2026, though no explicit independent committee approval or arm's length terms were detailed in the interim notes.

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In-Depth Analysis