Advanced: Comprehensive Analysis of Company Performance in Saudi Stock Market

Advanced Petrochemical Company is a Saudi joint-stock company established in October 2005 in Jubail Industrial City, Eastern Saudi Arabia. The company's shares were listed on the Saudi financial market (Tadawul) in 2006, becoming one of the key players in the local and regional petrochemical sector. Advanced focuses on producing low-density polyethylene, one of the most important plastic products used in packaging, agriculture, medicine, and infrastructure. The company relies on the Kingdom's oil and gas resources and benefits from strategic partnerships with major companies such as Saudi Aramco. Advanced's activities align with the Kingdom's Vision 2030, contributing to diversifying the national economy and developing a robust industrial base that supports sustainable growth.

The petrochemical sector is one of the main pillars of the Kingdom's economy, representing the primary source of non-oil exports and forming the core of many manufacturing industries. Advanced plays a pivotal role in this sector through its production of low-density polyethylene, which is used in food packaging, plastic pipes, medical products, and more. The company focuses on industrial integration, benefiting from the abundance of raw materials and low energy costs, allowing it to achieve competitive profit margins. In the face of intense competition from major companies such as SABIC and Sipchem, Advanced has distinguished itself through the quality of its products, operational flexibility, and its ability to export to global markets such as East Asia and Europe. The company also keeps pace with technological and environmental developments to remain at the forefront of the local and regional market.

In 2024, Advanced witnessed strong financial performance, supported by stable global demand for its products and improved operational efficiency. The company's net profits in the first quarter of 2024 exceeded 800 million Saudi Riyals, an increase of nearly 30% compared to the same period last year. Total annual revenues surpassed 4 billion Riyals, and growth is expected to continue in 2025 as the company expands its exports to new markets. Advanced benefited from the implementation of modern automation technologies, which reduced production costs and increased operating profits. The company also maintained a low level of debt, with a debt-to-equity ratio not exceeding 0.2, reflecting its financial strength and stability in the face of market fluctuations.

Advanced's stock is considered one of the active stocks within the Tadawul market, with the stock price ranging between 28 and 36 Riyals during 2024. The company's market capitalization exceeds 9 billion Riyals, with a total of 260 million shares issued. The price-to-earnings (P/E) ratio is estimated between 6 and 8 based on 2024 earnings, which is a moderate rate compared to the sector. The cash distribution yield reached about 15% of the stock price, one of the highest among listed companies. The estimated annual earnings per share are around 4 to 5 Riyals. These indicators reflect the attractiveness of the stock for investors seeking stable returns in the basic materials sector, with the necessity to monitor quarterly changes and fluctuations in raw material prices.

Advanced is committed to a generous cash dividend policy, as its Board of Directors recommended in 2024 a dividend distribution ranging between 5.4 and 5.8 Riyals per share for the year 2023. These returns represent a distribution ratio of 15-18% of the stock price, one of the highest rates in the Saudi market. This policy reflects the company's financial strength and its ability to achieve regular cash flows. The continuity of these distributions depends on future financial performance and the stability of global demand for the company's products. The company's financial management confirms its commitment to support this policy with any additional improvement in profits in the coming years.

Advanced's strategy focuses on production expansion and product diversification. The company announced a feasibility study for a new expansion project to produce low-density polyethylene with an additional capacity of 500,000 tons annually, with an investment exceeding one billion dollars. This step aims to meet the growing demand in local and international markets, especially in Asia and Europe. Advanced also seeks to develop advanced plastic products in collaboration with research centers such as King Abdullah University of Science and Technology (KAUST) to enhance product characteristics and increase their added value. The company keeps pace with environmental trends by investing in emission reduction technologies and improving industrial waste management.

Advanced faces strong competition from local, regional, and international companies, notably SABIC, Sipchem, and Ibn Sina. Advanced distinguishes itself by focusing on producing high-quality polymers and integrating with local suppliers such as Aramco. In contrast, major companies enjoy product diversity and larger financial bases, allowing them to better withstand fluctuations in raw material prices. Internationally, Advanced competes with companies like Dow Chemical, BASF, and Gulf oil sectors. To overcome these challenges, Advanced focuses on innovation, developing its production processes, and enhancing operational efficiency to maintain its market share.

Advanced's financial data shows strong solvency, as the company maintained a quick ratio above 1.0 and an extremely low debt ratio (0.2). In 2024, the company managed to refinance part of its debts on favorable terms, reducing the average cost of debt to 3.5%. This financial performance enhances the company's ability to face risks associated with fluctuations in oil and gas prices or changes in international markets. Advanced also places great importance on managing environmental and regulatory risks by complying with global standards in waste management and emission reduction, obtaining certified environmental credentials such as ISO 14001.

Advanced recognizes the importance of environmental sustainability in the petrochemical industry and continuously strives to reduce its carbon footprint and improve energy efficiency. The company has implemented projects to restructure waste management and reduce emissions by 8% from 2023 levels. It has also launched research initiatives in collaboration with scientific centers to develop environmentally friendly and recyclable plastic materials. The company obtained ISO 14001 certification in 2024, confirming its commitment to global environmental standards. These efforts reflect Advanced's pursuit of alignment with the Kingdom's Vision 2030 towards a sustainable and environmentally friendly economy.

In 2024, several notable events occurred in Advanced's journey, including the Board's recommendation for generous cash distributions, signing new financing agreements with local banks, and launching future expansion projects in polymer production. The company also signed a memorandum of understanding with King Abdullah University to develop advanced chemical additives and enhanced its efforts to rationalize energy consumption and reduce industrial emissions. Financially, Advanced received a high credit rating (AA-) due to improved repayment capacity and growing cash flows. The company continues to list its shares among leading stock indices, enhancing its liquidity and attractiveness to investors.

The petrochemical sector faces numerous challenges, primarily the volatility of oil and gas prices, which directly affect production costs and profit margins. Increasing global environmental regulations impose additional pressures on companies to develop environmentally friendly products and improve recycling processes. Additionally, competition with global companies that possess advanced financial and technological assets requires local companies, including Advanced, to continue innovating and enhancing operational efficiency. Furthermore, fluctuations in global currency prices and international market volatility represent risks that require flexible financial management and effective hedging strategies.

Advanced's growth plans focus on expanding production lines, particularly in advanced polymer units. The company intends to invest over one billion dollars in a new production unit, with expectations of increasing annual capacity to meet growing demand in local and international markets. Advanced also aims to diversify its customer base by exporting to new markets such as Latin America and North Africa. In research and development, the company focuses on innovating specialized plastic materials that meet the requirements of modern industries, alongside enhancing recycling efforts and aligning with global sustainability standards.

You can follow the latest news about Advanced and its financial data through the company's official website, where annual and quarterly reports and important disclosures are published. The Tadawul website is the primary source for real-time indicators, stock prices, and all disclosures related to the company. Financial news platforms such as Argaam, Al-Eqtisadiah, and Al-Riyadh provide comprehensive coverage of the company's news. Additionally, Saudi financial analysis institutions issue periodic reports on Advanced's performance, helping investors stay updated on the company's developments and the sector's latest trends.

Advanced's experience in the Saudi market serves as a model for successful financial and operational management and the ability to adapt to global changes in the petrochemical sector. Among the key lessons learned is the importance of focusing on innovation, adopting sustainable dividend policies, and maintaining strong financial solvency. Advanced's experience also emphasizes the necessity of keeping pace with environmental standards and global market trends while ensuring diversification of markets and products to face any potential fluctuations in the sector. Ultimately, the company demonstrates that sustainable growth requires a balance between expansion, risk hedging, and commitment to social and environmental responsibility.