Basic Chemical Industries Company manufactures and sells chemicals primarily in the Kingdom of Saudi Arabia. It operates through two segments, Chemicals and Adhesives and Other Materials. The company offers hydrochloric acid, caustic soda, chlorine gas, sodium hypochlorite, polyurethane chemicals, etc.; and ferric chloride, hot and colt melt adhesives, sulfuric acid, etc. for various applications. It purchases, formulates, processes, exports, imports, markets, distributes, and acts as an agent for the sale of chemicals. The company was founded in 1973 and is headquartered in Dammam, the Kingdom of Saudi Arabia.

Saudi Arabia

Basic Chemical Industries Company

Basic Materials

The company pays dividends from time to time. It has paid dividends in less than half the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are unclear. In the past 12 months, the dividend yield has barely been above zero and was substantially below that of its peers. 

1210.SR reported revenue of SAR 737mn in the last 12 months, down 2% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS fell 28% from FY24 to SAR 0.68.

The stock's performance has been mixed in the past six months, with growth following a decline. There is no clear price trend compared to its global peers from the same sector and industry (as shown above). It has underperformed this peer group by 0ppts over six months and grown 3ppts slower in the past month. At the same time, the stock's performance relative to its the peers from the same country and sector is different. The stock outperformed these peers by 2ppts over the past six months and grew 6ppts faster in the past month. With respect to the stock's valuation against its peers, its overall price performance is neutral.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 12.0% in the last 12 months, a decline from 18.0% in FY23. 

Historically, 1210.SR has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 2.6%, a growth from 2.0% in FY23. 

Another important profitability metric, return on assets (RoA), amounted to 1.5% in the last 12 months, an increase from 1.2% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 1.8%, below the peers. 

Basic Chemical Industries Company reported a return on equity (RoE) of 3.2% in the last 12 months, up from 2.5% in FY23. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.5 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are close to minimal. In combination with rigorous business standards, shareholder rights are well protected.

1210.SR has poor trading liquidity. The average private investor can sell his common position in the stock in a single trading day under normal market conditions. Liquidity is usually stable and is somewhat unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a very small market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is moderate. We note adequate interest coverage and an favourable capital structure, among the positive credit factors. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, negligible return on capital, and poor working capital management.

In highly turbulent market conditions, 1210.SR is not overly volatile. In other words, the stock will fall less than the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be low. 

In normal market circumstances, 1210.SR is not overly volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will remain relatively stable. The stock's losses on its worst days (less than 1-5% of the time) will range from very low to negligible. 

Considering past and projected metrics, the stock is moderately 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, neutral on EV/EBITDA, overpriced on P/FCF. 

Basic Chemical Industries Company

SAR 27.95

4

Basic Chemical Industries Company

SAR 27.95

4

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

SAR 27.95

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