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3050

Governance: C

SPCC

Southern Province Cement Co.

23.26 SAR / Share

As of: Mar 26, 2026

— P/E Ratio Trailing 12 Months

1.1x P/B Ratio Price to Book Value

3.0% Dividend Yield Annual Dividend / Share

3.26B SAR Market Cap Total Valuation

1.57 Beta Systematic Risk Index

-5.6% Net Margin Net Profit / Revenue

The Story

Southern Province Cement Company is navigating a capital-intensive transition, marked by a major factory overhaul and temporary operational losses while maintaining a significant debt-funded reinvestment cycle.

Source: Annual 2025 (2026-04-07)

Value Creation -4.5% 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

3.0%

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

+2.2%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

-5.6%

ROIC Return on Invested Capital

3.8%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

—

P/B Ratio Market capitalization compared to corporate book value

1.1x

EV / EBITDA Operating multiple reflecting core operational leverage

27.7x

EV / SALES Asset pricing multiple relative to total topline revenue

5.1x

Growth Story

Revenue has faced a downward trend, contracting from 1.07 billion SAR in fiscal 2023 to 867.3 million SAR in the twelve months ended December 31, 2025. Despite this top-line pressure, the company is in a heavy reinvestment phase, evidenced by a five-year average reinvestment rate of 59.1%. This capital is primarily directed toward the Jazan third-line production project and energy renewal at the Bisha plant. While the sustainable growth rate is currently modest at 2.25%, the company's long-term capacity is tied to the completion of these modernization efforts, which involve replacing older production lines by 2026 to enhance future output and efficiency.

Profitability Dynamics

Profitability has come under significant strain, with the company reporting an operating loss of 40.8 million SAR and a net loss of 48.5 million SAR for the TTM period. This represents a sharp reversal from the 193 million SAR net income in fiscal 2024. The value creation profile is currently negative, with a five-year average ROIC of 3.8% trailing the WACC of 8.29%, resulting in a value gap of -4.49%. Margin compression is evident as the operating margin fell to -4.7% TTM. Cash flow generation is heavily impacted by massive capital expenditures, which reached 658.3 million SAR TTM, as the company prioritizes long-term infrastructure over immediate cash retention.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.57

Cost of Equity Minimum required rate of return demanded by shareholders

11.2%

WACC Weighted average cost of total debt and equity funding

8.3%

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

38.8%

Risk Factors

The risk profile is characterized by rising leverage and significant accounting adjustments. Total debt has climbed to 1.26 billion SAR to fund ongoing projects, leading to a net liabilities-to-equity ratio of 0.52. The company recently rescheduled its bank facilities, resulting in a gain of 9.8 million SAR but highlighting the reliance on variable-rate Islamic financing. Furthermore, the financial history has been impacted by material restatements related to borrowing cost capitalization and inventory impairments at the decommissioned Jazan lines. External risks include heightened geopolitical tensions in the Gulf region, which management notes could disrupt supply chains and increase operating costs.

Governance Disclosures

Rating: C

We track 9 key governance and oversight matters for this company in our database.

Significance: 3/10 Tunneling

Board of Directors Remuneration

Remuneration and allowances for Board of Directors members increased from SAR 2.7 million in 2024 to approximately SAR 7 million in 2025.

Mitigating Factors: Remuneration is disclosed in accordance with the company's bylaws and the proposal of the Board of Directors.

Significance: 8/10 Info Asymmetry

Prior Year Adjustments and Financial Restatements

The company identified and corrected multiple accounting errors, including SAR 28.4 million in incorrectly capitalized borrowing costs and a SAR 41 million unrecognized impairment for spare parts related to a decommissioned production line.

Mitigating Factors: The company has appropriately reversed the accounting impact and adjusted opening retained earnings to reflect these corrections.

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In-Depth Analysis