Economic Company: Insights on Its Role in Saudi Market

The Economic Company, officially known as King Abdullah Economic City Company, is a Saudi joint-stock company listed in the real estate and construction sector on the financial market (Tadawul). The company was established to develop King Abdullah Economic City, one of the largest integrated city projects north of Jeddah. The city combines sectors of industry, logistics, housing, tourism, entertainment, and modern infrastructure.

The Economic Company is the most prominent model of private sector contribution to achieving the goals of Saudi Vision 2030, as it works in parallel with government entities to attract local and foreign investments. The company's activities range from land development, creating industrial and residential areas, project management, and providing civil and tourism services. The company benefits from government facilities, such as tax exemptions and infrastructure support, enhancing its competitiveness and attractiveness to investors.

Shares of the Economic Company are traded in the Saudi market under the symbol 1111, attracting investor interest for the sustainable growth opportunities it offers amid the Kingdom's shift towards economic diversification away from oil.

The Economic Company implements a wide range of activities and projects, focusing its efforts on developing King Abdullah Economic City as a comprehensive urban center serving various sectors. The company's main activities include:

1. Land development and sales: Marketing and selling residential and industrial lands within the city, targeting local and international investors.
2. Infrastructure development: Building and developing roads, facilities, water and electricity networks, and ports, ensuring the operational readiness of the city.
3. Operating and managing industrial and residential areas: The company develops and manages integrated residential complexes and specialized industrial zones, contributing to attracting productive companies and factories.
4. Tourism and entertainment projects: The company has launched significant projects such as the marina, which includes yacht berths and recreational and commercial areas, enhancing the city's tourism appeal.
5. Civil services: Providing integrated services including facility maintenance, waste management, and logistics services, improving the quality of life in the city.

Through these projects, the Economic Company aims to achieve diverse and sustainable revenues, focusing on innovation and modern technologies in construction and smart city management.

The Economic Company recorded financial performance in 2024 and 2025 that reflects the growth of its business volume and project expansion. Key financial indicators include:

- Annual revenues: Reached approximately 750 million Saudi Riyals in 2024, achieving a growth rate of 12% compared to the previous year.
- Net profits: Net profits for 2024 amounted to about 100 million Riyals, an increase of 10% year-on-year.
- Quarterly revenues: In the fourth quarter of 2024, the company recorded revenues of 200 million Riyals and a net profit of 28 million Riyals.
- Capital expenditures: The company spent 150 million Riyals on infrastructure projects in 2024.
- Cash flows: Operating cash flows exceeded 120 million Riyals, reflecting efficient liquidity management.

These results indicate the company's ability to achieve sustainable growth, supported by diversified income sources and successful operation of new projects.

The stock of the Economic Company (symbol 1111) experienced measured fluctuations over the past two years, influenced by project execution and economic news. By the end of December 2025, the stock price stabilized at 14.50 Saudi Riyals, after fluctuating between 12 and 15.50 Riyals during 2024.

The company's market capitalization was approximately 13 billion Saudi Riyals with 900 million shares outstanding. The price-to-earnings (P/E) ratio of 24 times reflects optimistic growth expectations, especially with the ongoing implementation of city projects and the entry of new facilities into operation.

As for the dividend yield, the company announced a distribution of 0.45 Riyals per share in 2024 (a cash yield of about 3.1%). The company is expected to continue its moderate distribution policy as long as profits continue to grow.

The stock's movement is also linked to major economic factors such as global interest rates and oil prices, which affect project financing and capital flows.

The real estate and construction sector in the Saudi market is one of the most supported sectors by the government as part of the economic diversification strategy. Vision 2030 aims to transform the Kingdom into a global investment and tourism hub, leading to the launch of massive projects such as NEOM, the Red Sea Project, and Qiddiya, in addition to King Abdullah Economic City.

The sector is witnessing continuous growth in demand for residential units, infrastructure, and industrial areas, driven by population growth and the shift towards smart cities. Major companies like the Economic Company benefit from government facilities, tax exemptions, and logistical support.

Despite the significant opportunities, there are challenges related to fluctuations in land and construction material prices, competition from local and international companies, and the need for innovation in project management. However, the sector remains attractive to investors seeking long-term growth and relative stability compared to other sectors.

The Economic Company holds a leading position among Saudi real estate development companies, especially in integrated city projects. It competes with strong players such as Dar Al Arkan (2200), Al Bilad Development (4221), and Red Sea Global (2280).

The Economic Company stands out for its focus on one large and integrated project, giving it a leadership advantage in developing new cities supported by the government. In contrast, other companies rely on a broader portfolio of projects in multiple cities.

The company faces competition from international alliances and government development companies such as NEOM and Qiddiya, as well as pressures from contractors and Gulf developers. Nevertheless, government support, project size, and diverse partnerships provide the Economic Company with flexibility and the ability to attract investors and beneficiaries from its projects.

In recent years, the Economic Company has worked on diversifying its income sources to reduce reliance on land sales and traditional real estate projects. The company has begun generating growing revenues from city services, such as facility management, providing tourism services, and leasing commercial and entertainment spaces.

This diversification has contributed to increased financial stability and improved profit margins, especially with the completion and marketing of waterfront projects and industrial areas. Additionally, expanding cooperation with industrial and service companies within the city has helped create long-term cash flows.

The company's strategy focuses on financial sustainability by keeping pace with market demands, investing in modern technologies, and enhancing the quality of services provided to residents and investors.

Recently, new projects have been launched that enhanced the Economic Company's position in the market. In 2025, the company began implementing the marina project, which includes yacht berths, recreational areas, and commercial centers, with expectations of attracting investors and visitors from within and outside the Kingdom.

The company also announced a strategic industrial partnership to establish a new food factory with an investment of 250 million Riyals, enhancing the occupancy of industrial lands and creating new job opportunities.

These expansions align with the global trend towards smart cities, as the company invests in digital infrastructure, smart energy and water management systems, and improving the quality of life in the city.

These developments affirm the company's commitment to growth plans and enhancing future revenues by capitalizing on available market opportunities.

The Economic Company's stock is influenced by several external and internal factors. Key influences include:

1. Interest rate movements: Rising global interest rates may reduce real estate financing, impacting land sales and residential projects.
2. Oil prices: Indirectly affect government spending and investments in infrastructure projects.
3. Global economic developments: Changes in liquidity, capital flows, and global market movements affect the appetite of both foreign and local investors.
4. Company financial results: Revenue and profit growth, new project implementations, and improved cash flows all enhance investor confidence.
5. Management changes: Any changes in the board of directors or leadership structure may impact the company's strategy and market expectations.

Therefore, it is important to monitor official news and analyses from regulatory bodies to understand stock dynamics.

The Economic Company adopts a balanced dividend distribution policy that considers growth and financial sustainability. In 2024, the company announced a cash dividend distribution of 0.45 Riyals per share (yielding approximately 3.1%).

The continuation of the distribution depends on profit levels and free cash flows, with management committed to maintaining stable distributions as long as positive performance continues. This policy helps attract investors seeking regular income and supports stock price stability, especially during market fluctuations.

It is important to note that the company may reconsider its distribution policy based on future project investment requirements or general economic conditions.

Despite positive performance, the Economic Company faces several risks and challenges that investors should closely monitor:

- Fluctuations in land and property prices: Changes in economic conditions may pressure demand for land and residential projects, impacting revenues.
- Rising construction costs: Increases in global construction material prices affect profit margins, requiring effective contract and procurement management.
- Tight liquidity and interest rates: Financing for major projects sometimes relies on loans, and any increase in interest rates raises financing burdens.
- Competition: The entry of new companies or strong alliances may intensify competition for projects and contracts.

The company is working on strategies to mitigate these risks, such as signing long-term contracts and developing multiple partnerships.

Financial research houses often classify the Economic Company's stock in the "hold" category, with a positive outlook conditional on accelerating project implementation and improved financial results. The high price-to-earnings (P/E) ratio indicates that the market is pricing future growth expectations significantly, especially with the entry of waterfront projects and industrial facilities into operation.

Analysts believe that continued growth in revenues and profits, along with a clear distribution strategy, may enhance the stock's attractiveness in long-term investment portfolios. However, it is recommended to monitor the company's quarterly results and news of major project implementations to assess any changes in expectations.

Investment decisions remain an individual responsibility requiring a comprehensive review of financial data and official news, along with consulting a certified financial advisor before making any decisions.

For accurate information about the Economic Company, it is advisable to rely on the following official sources:

- The official website of King Abdullah Economic City Company: includes financial reports, press news, project details, and services.
- The Tadawul website: contains a detailed page for the stock, price data, disclosures, and market news.
- The Saudi Capital Market Authority: publishes regulations, regulatory decisions, and announcements related to listed companies.
- Specialized financial websites like Argaam and economic news agencies: provide sector indicators analyses and comparative reports between companies.

These sources ensure that investors have access to the latest financial data and news, aiding in making decisions based on reliable and transparent information.