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7211

Governance: D

AZM

Saudi Azm for Communication and Information Technology Co.

22.40 SAR / Share

As of: May 28, 2026

27.9x P/E Ratio Trailing 12 Months

— P/B Ratio Price to Book Value

— Dividend Yield Annual Dividend / Share

1.31B SAR Market Cap Total Valuation

0.96 Beta Systematic Risk Index

16.6% Net Margin Net Profit / Revenue

The Story

A high-return IT services provider transitioning to the TASI Main Market, fueled by the Kingdom's digital transformation and a capital-light business model.

Source: Q3 2026 (2026-04-29)

Value Creation +27.8% 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

-0.3%

Payout Ratio Percent of net profits distributed as dividends

—

Net Margin Net profit margin generated from total operational revenue

16.6%

ROIC Return on Invested Capital

36.3%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

27.9x

P/B Ratio Market capitalization compared to corporate book value

—

EV / EBITDA Operating multiple reflecting core operational leverage

28.0x

EV / SALES Asset pricing multiple relative to total topline revenue

4.6x

Growth Story

AZM has demonstrated a consistent upward trajectory, with revenue growing from SAR 170.8 million in fiscal 2023 to a TTM figure of SAR 284.5 million. This expansion is particularly evident in the 'Platforms for Third Parties' segment, which saw revenue nearly double in the first nine months of fiscal 2026 compared to the prior year. Despite a 5-year average reinvestment rate of -0.7%, which suggests the business can scale without heavy physical capital expenditures, the company has maintained a strong growth capacity. This is further supported by its strategic move from the Nomu parallel market to the TASI Main Market in July 2025, signaling a transition into a more mature phase of its corporate lifecycle.

Profitability Dynamics

The company is a significant value creator, evidenced by a 5-year average ROIC of 36.3% against a WACC of 8.5%, resulting in a substantial positive gap of 27.8%. This efficiency is reflected in a TTM profit margin of 16.6% and a net income of SAR 47.1 million. AZM maintains high liquidity, with SAR 104.9 million held in mutual funds as of March 2026 to manage excess short-term cash. The business model's ability to generate high returns on invested capital while maintaining an operating margin of 14.5% highlights its effectiveness in converting service-based contracts into shareholder value.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.96

Cost of Equity Minimum required rate of return demanded by shareholders

8.5%

WACC Weighted average cost of total debt and equity funding

8.6%

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

2.0%

Risk Factors

AZM's risk profile is characterized by a beta of 0.96, indicating market sensitivity in line with the broader Saudi index. While the company maintains a manageable debt level of SAR 25.9 million, it faces specific operational risks related to customer concentration, as government and semi-government clients contribute approximately 75% of total revenue. Furthermore, trade receivables increased to SAR 112 million by March 2026, up from SAR 58.8 million in June 2025, reflecting the extended billing cycles often associated with large-scale public sector projects. However, the company has managed this by maintaining a low provision for expected credit losses and a strong cash-to-debt ratio.

Governance Disclosures

Rating: D

We track 7 key governance and oversight matters for this company in our database.

Significance: 3/10 Tunneling

Capital Injection into Newly Incorporated Associate

The Group transferred SAR 547,500 to provide share capital for the newly incorporated Altaqniyat Company Real Estate. The Group holds a 47.5% equity stake in this associate, which is engaged in real estate development and technology-driven services.

Mitigating Factors: The transaction is part of a formal investment in an associate and is subject to the Group's share of results and accounting oversight.

Significance: 8/10 Info Asymmetry

Subcontracting and Operational Dependency on Affiliates

The Group utilizes affiliates, specifically Azm Digital Company and AZM Financial Technology Company, as subcontractors. For the nine-month period ended 31 March 2026, expenses incurred by Azm Digital on behalf of the Group totaled SAR 72,139,778, while expenses incurred by AZM Financial Technology totaled SAR 43,385,678.

Mitigating Factors: Transactions with related parties are disclosed as being conducted on terms available to third parties in the normal course of business and approved by management or the Board of Directors.

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In-Depth Analysis