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4261

Governance: A

THEEB

Theeb Rent a Car Co.

25.16 SAR / Share

As of: May 28, 2026

9.6x P/E Ratio Trailing 12 Months

1.7x P/B Ratio Price to Book Value

4.4% Dividend Yield Annual Dividend / Share

1.62B SAR Market Cap Total Valuation

2.04 Beta Systematic Risk Index

10.3% Net Margin Net Profit / Revenue

The Story

THEEB operates a capital-intensive car rental and leasing business in Saudi Arabia, driving robust revenue growth through aggressive debt-funded fleet expansion while maintaining a thin spread over its cost of capital.

Source: Q1 2026 (2026-05-14)

Value Creation +0.2% 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

4.4%

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

+28.4%

Payout Ratio Percent of net profits distributed as dividends

41.9%

Net Margin Net profit margin generated from total operational revenue

10.3%

ROIC Return on Invested Capital

9.1%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

9.6x

P/B Ratio Market capitalization compared to corporate book value

1.7x

EV / EBITDA Operating multiple reflecting core operational leverage

6.1x

EV / SALES Asset pricing multiple relative to total topline revenue

2.2x

Growth Story

THEEB's growth story resembles a high-octane engine requiring constant refueling. Top-line performance has shown strong momentum, with revenue rising from 1.30 billion SAR in FY 2024 to 1.50 billion SAR in FY 2025, and reaching 1.64 billion SAR in the TTM period. This expansion is supported by a high sustainable growth rate of 28.40%, driven by an extraordinary five-year average reinvestment rate of 312.93% and a five-year average return on invested capital (ROIC) of 9.08%. However, this growth is highly capital-intensive, requiring massive capital expenditures of 1.18 billion SAR in the TTM period to expand and maintain the fleet. The company's long-term growth capacity is fundamentally tied to its ability to secure external debt financing, as its reinvestment needs far exceed its organic operating cash generation.

Profitability Dynamics

The company's profitability story is a thin-margin race where speed limits returns. THEEB's five-year average ROIC of 9.08% barely exceeds its WACC of 8.93%, resulting in a narrow value creation gap of 0.15%. While the company maintains stable operating margins of 10.59% TTM and profit margins of 10.31% TTM, its cash flow generation is severely constrained by the continuous need for fleet replenishment. With TTM Capex of 1.18 billion SAR dwarfing its TTM NOPAT of 169.39 million SAR, the business model yields negative free cash flows. This indicates that while the company successfully generates accounting profits, the actual cash generated is immediately consumed by the business to sustain its operational scale, leaving minimal free cash flow for debt reduction or unconstrained distributions.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

2.04

Cost of Equity Minimum required rate of return demanded by shareholders

13.4%

WACC Weighted average cost of total debt and equity funding

8.9%

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

129.2%

Risk Factors

Navigating THEEB's financial path requires managing heavy debt and credit bumps. The company's capital structure is highly leveraged, with total debt of 2.10 billion SAR significantly exceeding its market capitalization of 1.62 billion SAR, contributing to a high relevered beta of 2.04. A structural risk exists as current liabilities exceed current assets, primarily because short-term portions of term loans (amounting to 1.01 billion SAR of the 2.02 billion SAR total term loans) are utilized to finance vehicles classified as non-current assets. Furthermore, the company faces substantial credit risk, with gross accounts receivable reaching 619.18 million SAR as of March 31, 2026, offset by a massive expected credit loss allowance of 225.73 million SAR. Additionally, a potential tax exposure of 29.76 million SAR and withholding tax of 3.94 million SAR from historical ZATCA assessments remains a lingering, though indemnified, contingency.

Governance Disclosures

Rating: A

We track 6 key governance and oversight matters for this company in our database.

Significance: 2/10 Tunneling

Related-Party Transactions with Affiliate

The company was charged expenses of SAR 273,131 by Mohammad Ahmed Al-Theeb Contracting Company, an affiliate related to shareholders, during the three-month period ended 31 March 2026.

Mitigating Factors: The terms of the transactions with related parties are approved by the Company’s management. The transactions with the related parties are carried out in the normal course of business and their settlements take place in the normal course of business as well.

Significance: 4/10 Entrenchment

Long-Term Employee Incentive Share Program

The Board of Directors recommended a share capital increase that includes the allocation of 1,471,504 shares, representing 3.4% of the total capital increase, specifically for a long-term employee incentive shares program.

Mitigating Factors: The program is subject to approval by the Extraordinary General Assembly.

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In-Depth Analysis