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3003

Governance: B

CITY CEMENT

City Cement Co.

13.00 SAR / Share

As of: Mar 26, 2026

14.1x P/E Ratio Trailing 12 Months

1.0x P/B Ratio Price to Book Value

5.0% Dividend Yield Annual Dividend / Share

1.82B SAR Market Cap Total Valuation

1.02 Beta Systematic Risk Index

24.8% Net Margin Net Profit / Revenue

The Story

A high-margin, debt-free domestic cement producer focused on harvesting cash flows and distributing capital rather than aggressive expansion.

Source: Annual 2025 (2026-04-09)

Value Creation -1.9% 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

5.0%

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

-3.1%

Payout Ratio Percent of net profits distributed as dividends

70.6%

Net Margin Net profit margin generated from total operational revenue

24.8%

ROIC Return on Invested Capital

6.9%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

14.1x

P/B Ratio Market capitalization compared to corporate book value

1.0x

EV / EBITDA Operating multiple reflecting core operational leverage

7.6x

EV / SALES Asset pricing multiple relative to total topline revenue

3.5x

Growth Story

City Cement is currently in a mature 'harvest' phase, where revenue growth has plateaued. For the fiscal year 2025, revenue reached SAR 519.6 million, nearly identical to the SAR 520.8 million reported in fiscal 2024. The company's five-year average reinvestment rate is -45.6%, indicating that it is divesting or returning more capital to shareholders than it is retaining for growth. This lack of internal compounding results in a negative sustainable growth rate of -3.1%, suggesting that the business is prioritizing current cash distributions over long-term capacity expansion, despite its strategic pivot toward alternative fuels and environmental processing.

Profitability Dynamics

The company maintains strong operational efficiency, evidenced by a TTM operating margin of 28.0% and a profit margin of 24.8%. However, value creation remains under pressure as the five-year average ROIC of 6.9% sits below the estimated WACC of 8.8%, resulting in a negative value gap. To align financial reporting with the actual economic life of its assets, the company recently extended the estimated useful life of its machinery and buildings to 40 years. This accounting shift is expected to reduce annual depreciation expenses by approximately SAR 35 million starting in 2026, which will likely bolster reported net income even if underlying cash generation remains stable.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.02

Cost of Equity Minimum required rate of return demanded by shareholders

8.8%

WACC Weighted average cost of total debt and equity funding

8.8%

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

0.0%

Risk Factors

From a balance sheet perspective, City Cement is exceptionally low-risk, carrying negligible total debt of just SAR 57,440 against a market capitalization of SAR 1.82 billion. This 'debt-free' status eliminates interest rate sensitivity and financial leverage concerns. The primary risks are business-specific: a 100% concentration in the Saudi Arabian market and a heavy reliance on its 30-year quarry license. While the company manages credit risk through bank guarantees for its distributors, it remains sensitive to domestic construction cycles and potential changes in energy input costs, which are critical to the cement production process.

Governance Disclosures

Rating: B

We track 7 key governance and oversight matters for this company in our database.

Significance: 2/10 Tunneling

Board of Directors Remuneration and Allowances

The Company disclosed board of directors' remuneration of SAR 1,400,000 and attendance allowances of SAR 351,133 for the fiscal year 2025.

Significance: 7/10 Info Asymmetry

Revision of Asset Useful Life Estimates

The Group adjusted the maximum estimated useful life of buildings to 40 years from 30 years and machinery to 40 years from 25 years, resulting in a decrease in depreciation expense of SAR 5,859,335 for 2025 and SAR 35,156,010 for subsequent years.

Mitigating Factors: The Group conducted a comprehensive review of the estimated useful lives and residual values, supported by an assessment from an independent technical expert.

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In-Depth Analysis