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4050

Governance: C

SASCO

Saudi Automotive Services Co.

45.60 SAR / Share

As of: May 28, 2026

86.3x P/E Ratio Trailing 12 Months

3.7x P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

3.19B SAR Market Cap Total Valuation

1.42 Beta Systematic Risk Index

0.3% Net Margin Net Profit / Revenue

The Story

SASCO is a high-volume, low-margin retail and automotive services network expanding rapidly across Saudi Arabia, supported by substantial lease-backed infrastructure but constrained by thin operating profitability and high leverage.

Source: Q1 2026 (2026-05-14)

Value Creation -3.2% 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

-7.4%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

0.3%

ROIC Return on Invested Capital

4.0%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

86.3x

P/B Ratio Market capitalization compared to corporate book value

3.7x

EV / EBITDA Operating multiple reflecting core operational leverage

25.3x

EV / SALES Asset pricing multiple relative to total topline revenue

0.6x

Growth Story

SASCO has demonstrated consistent top-line expansion, with revenue rising from SR 7.85 billion in FY2022 to SR 11.80 billion in FY2025, and reaching SR 12.07 billion on a TTM basis. This growth has been propelled by strategic acquisitions, such as Naft and Tadbeer, alongside the continuous rollout of new fuel stations. However, this rapid physical expansion has not translated into self-sustaining internal growth capacity. The company's five-year average reinvestment rate stands at -187.16%, reflecting volatile capital allocation and heavy reliance on external debt rather than retained earnings to fund its footprint. Consequently, the sustainable growth rate is negative at -7.40%, indicating that while the top-line continues to scale, the underlying business model remains dependent on external financing to sustain its expansion.

Profitability Dynamics

Despite generating billions in revenue, SASCO operates on extremely thin margins, with a TTM operating margin of just 1.24% and a net profit margin of 0.31%. This low-margin profile is driven by the high cost of direct materials, which consumed SR 2.71 billion of the SR 3.02 billion in revenue during the first quarter of 2026. The company's five-year average Return on Invested Capital (ROIC) is 3.96%, which fails to cover its estimated Weighted Average Cost of Capital (WACC) of 7.11%. This negative spread of -3.15% highlights that the company is currently destroying economic value as it scales. Profitability is further pressured by substantial depreciation of right-of-use assets and finance costs on lease liabilities, reflecting the heavy burden of its leased station network.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.42

Cost of Equity Minimum required rate of return demanded by shareholders

10.6%

WACC Weighted average cost of total debt and equity funding

7.1%

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

147.2%

Risk Factors

SASCO's aggressive expansion has left it with a highly leveraged balance sheet, carrying SR 4.70 billion in total debt against a cash balance of SR 224.92 million. This leverage is compounded by a net current liabilities position of SR 1.14 billion as of March 31, 2026, presenting ongoing working capital challenges. The company's risk profile is also elevated by its lease obligations, with lease contract liabilities totaling SR 2.81 billion. Operationally, the business is exposed to fuel price volatility and high fixed rental costs. Furthermore, the company's beta of 1.42 reflects high systematic risk and market sensitivity. While the board maintains that the cash-generative nature of fuel retail and access to SR 345.8 million in undrawn Murabaha facilities mitigate going concern risks, the thin interest coverage and heavy debt service requirements remain significant vulnerabilities.

Governance Disclosures

Rating: C

We track 8 key governance and oversight matters for this company in our database.

Significance: 4/10 Info Asymmetry

Restricted Bank Balances for Unclaimed Dividends

The Group maintains restricted bank balances of SR 49,537,119 as of March 31, 2026, representing unclaimed dividend accounts kept in separate bank accounts with restrictions on usage or withdrawal.

Mitigating Factors: The accounts are marked as restricted by the banks to prevent operational use.

Significance: 5/10 Info Asymmetry

Non-Wholly Owned Subsidiaries and Non-Controlling Interests

The Group operates several subsidiaries, including Naft Services Company Limited (80% ownership) and Tadbeer Recruitment Company (70% ownership), which introduces non-controlling interests (minority shareholders) of 20% and 30% respectively.

Mitigating Factors: All inter-group accounts and transactions have been eliminated on consolidation.

For more, click here to view the full governance profile →

In-Depth Analysis