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3080

Governance: A

EPCCO

Eastern Province Cement Co.

24.34 SAR / Share

As of: Mar 26, 2026

9.3x P/E Ratio Trailing 12 Months

0.9x P/B Ratio Price to Book Value

6.6% Dividend Yield Annual Dividend / Share

2.09B SAR Market Cap Total Valuation

1.09 Beta Systematic Risk Index

17.8% Net Margin Net Profit / Revenue

The Story

A vertically integrated cement and precast concrete producer currently undergoing a massive capital expansion to modernize its production capacity.

Source: Q3 2025 (2025-11-09)

Value Creation -0.3% 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

6.6%

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

+2.2%

Payout Ratio Percent of net profits distributed as dividends

61.5%

Net Margin Net profit margin generated from total operational revenue

17.8%

ROIC Return on Invested Capital

8.3%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

9.3x

P/B Ratio Market capitalization compared to corporate book value

0.9x

EV / EBITDA Operating multiple reflecting core operational leverage

5.6x

EV / SALES Asset pricing multiple relative to total topline revenue

1.7x

Growth Story

Revenue has shown a consistent upward trajectory, growing from 784.2 million SAR in fiscal 2022 to a TTM figure of 1.26 billion SAR. This expansion is supported by a 5-year average reinvestment rate of 38.54%, as the company aggressively pours capital back into its operations. However, the sustainable growth rate—the pace at which the company can grow using internally generated funds—is a modest 3.22%, reflecting the capital-intensive nature of the industry and a thin return on invested capital. The growth story is currently centered on the 'Line 5' project, with 417.9 million SAR added to capital work-in-progress during the nine months ended September 30, 2025, signaling a significant push to expand long-term capacity.

Profitability Dynamics

EPCCO operates with a thin margin of value creation, as evidenced by a 5-year average ROIC of 8.34% against a WACC of 8.17%, resulting in a narrow positive gap of 0.17%. Operating margins remain healthy at 22.11% TTM, though net income has seen some pressure, dipping from 247.9 million SAR in fiscal 2024 to 223.9 million SAR TTM. Profitability is bifurcated: the cement segment contributed 129.7 million SAR in net profit for the first nine months of 2025, while the precast segment added 31.4 million SAR. Cash flow generation is currently being absorbed by heavy capital expenditures, with TTM Capex reaching 274.7 million SAR as the company funds its new production line, leading to a temporary squeeze on free cash flow.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.09

Cost of Equity Minimum required rate of return demanded by shareholders

9.1%

WACC Weighted average cost of total debt and equity funding

8.7%

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

7.6%

Risk Factors

The risk profile is characterized by significant geopolitical exposure and large-scale project execution risks. EPCCO holds a 31.58% stake in the Arab Yemen Cement Company, which has faced ongoing impairment due to economic and security instability in Yemen; the total impairment provision reached 151.0 million SAR by September 30, 2025. On the balance sheet, the company has recently utilized short-term credit facilities from Banque Saudi Fransi and Saudi National Bank, totaling approximately 155.6 million SAR, specifically to finance the Line 5 project. Furthermore, the restatement of prior-year financials due to revenue recognition errors in the precast segment highlights internal reporting risks that management has recently addressed.

Governance Disclosures

Rating: A

We track 5 key governance and oversight matters for this company in our database.

Significance: 3/10 Tunneling

Board and Executive Remuneration

Total compensation for the Board of Directors amounted to SAR 4.488 million, while key management personnel received SAR 10.383 million in salaries, wages, allowances, and end-of-service expenses during the nine-month period.

Mitigating Factors: Remuneration is disclosed in detail as per regulatory requirements for joint-stock companies.

Significance: 6/10 Info Asymmetry

Correction of Prior Period Accounting Errors

The Group identified and corrected errors in the classification of discretionary portfolios (reclassified from FVTOCI to FVTPL) and revenue recognition for the precast segment under IFRS 15. These corrections resulted in a SAR 15.57 million increase in previously reported net profit for the nine-month period ended September 30, 2024.

Mitigating Factors: The errors were voluntarily identified and corrected through retrospective restatements in compliance with IAS 8.

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In-Depth Analysis