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4008

Governance: A

SACO

Saudi Company for Hardware

22.81 SAR / Share

As of: May 28, 2026

17.9x P/E Ratio Trailing 12 Months

2.2x P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

818.30M SAR Market Cap Total Valuation

0.79 Beta Systematic Risk Index

4.3% Net Margin Net Profit / Revenue

The Story

SACO is transitioning from a period of significant operational losses toward a fragile recovery, marked by a return to profitability in fiscal 2025 despite a history of capital erosion.

Source: Annual 2025 (2026-03-29)

Value Creation -10.6% 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

-35.4%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

4.3%

ROIC Return on Invested Capital

-2.5%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

17.9x

P/B Ratio Market capitalization compared to corporate book value

2.2x

EV / EBITDA Operating multiple reflecting core operational leverage

10.1x

EV / SALES Asset pricing multiple relative to total topline revenue

1.0x

Growth Story

The company has demonstrated a consistent upward trend in top-line performance, with revenue expanding from SAR 930.1 million in fiscal 2023 to SAR 1.067 billion in the twelve months ended December 31, 2025. Despite this steady sales growth, the company's internal capacity for expansion is heavily weighed down by its historical performance. With a five-year average ROIC of -2.54% and a high reinvestment rate, the sustainable growth rate is calculated at -35.4%. This indicates that while the market demand for SACO's products is increasing, the business has historically struggled to fund this growth through its own operations, relying instead on external capital to maintain its market presence.

Profitability Dynamics

SACO's profitability narrative is one of recent and significant turnaround. After enduring net losses of SAR 68.9 million in fiscal 2023 and SAR 14.1 million in fiscal 2024, the company achieved a positive net income of SAR 45.6 million in fiscal 2025. This recovery is reflected in a TTM operating margin of 4.31%. However, the long-term view reveals a persistent value creation gap; the company’s average return on capital remains significantly below its WACC of 7.97%, resulting in a negative gap of 10.51%. While the current TTM NOPAT of SAR 45.6 million is a positive sign, the company is still in the early stages of proving it can consistently generate returns that exceed its cost of capital.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.79

Cost of Equity Minimum required rate of return demanded by shareholders

7.7%

WACC Weighted average cost of total debt and equity funding

8.1%

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

31.4%

Risk Factors

The risk profile for SACO is centered on its debt obligations and the sensitivity of its financing to market rates. The company carries SAR 256.8 million in total debt against a relatively thin cash position of SAR 32.6 million. As disclosed in financial footnotes, SACO utilizes SAR 338 million in credit facilities, including Murabaha and Tawarroq financing, which are tied to SIBOR and secured by order notes. This exposes the company to interest rate volatility. Furthermore, the presence of goodwill from the Medscan acquisition represents a potential impairment risk if that specific cash-generating unit fails to meet performance expectations. A beta of 0.77 suggests moderate market sensitivity, but the primary risk remains the operational execution of its turnaround strategy.

Governance Disclosures

Rating: A

We track 3 key governance and oversight matters for this company in our database.

Significance: 6/10 Asset Risk

Credit Facility Guarantees

The company has secured SAR 338 million in credit facilities from local banks, which are backed by order notes payable on demand.

Mitigating Factors: Facilities are obtained at prevailing market rates based on SIBOR.

Significance: 4/10 Info Asymmetry

Subsidiary Management and Goodwill Monitoring

The company manages its acquisition of Medscan Terminal Company Limited as a single cash-generating unit, concentrating the monitoring of goodwill at this specific subsidiary level.

Mitigating Factors: Goodwill is monitored by management in accordance with IFRS standards as endorsed in KSA.

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In-Depth Analysis