Saudi Energy Company "1Q26; positive results, FY26 EBIT unchanged" (Neutral)

研报英文原文证据摘录

Saudi Energy Company "1Q26; positive results, FY26 EBIT unchanged" (Neutral)

Forecast returns

Forecast price appreciation 0.9%

Forecast dividend yield 4.1%

Forecast stock return 5.1%

Market return assumption 9.7%

Forecast excess return -4.7%

Company Description

SAUDI ELECTRICITY COMPANY SJSC (SEC) is a predominantly state-owned monopoly energy

utility based in Riyadh, Saudi Arabia. Its activities are exclusively concentrated within the

Kingdom, primarily overseeing the generation, transmission, and distribution of

electricity. The business caters to several sectors including agriculture, commercial,

government, residential, etc.

Valuation Method and Risk Statement

We value SEC using a DDM methodology.

1. Regulatory and Tariff - SEC operates under a tightly regulated framework where tariff

structures, allowed revenues, and WACC are determined by regulatory authority and

government bodies. Any changes to WACC could have a material positive or negative impact

on profitability, cash flows, and investor returns.

2. Fuel Cost and Settlement - SEC is exposed to fuel cost volatility and legacy disputes with

suppliers like Aramco. Such liabilities, if recurring or unresolved, can distort earnings visibility

and strain liquidity, especially in a capital-intensive environment.

3. Financing and Liquidity - Nearly half of the debt is subject to refinancing, interest rate, and

liquidity risks. Rising finance costs and reliance on sukuks and syndicated loans could pressure

margins. Any downgrade or market disruption could affect access to capital and cost of

funds.

4. Operational and Infrastructure - SEC faces risks from aging infrastructure, asset failures,

and capex overruns. Any delay in upgrades or inefficiencies could lead to service disruptions,