Exchange: SAU | Sector: Real Estate | Industry: REIT Diversified
Q2 2025
Published: Jun 30, 2025
Earnings Highlights
Revenue of $94.59M up 111.8% year-over-year
EPS of $-0.02 decreased by 149.2% from previous year
Net income of -4.37M
"N/A" - N/A
SEDCO Capital REIT Fund (4344.SR) QQ2 2025 Results: Robust Operating Profitability Amid a Material One‑Off Charge Driving Net Loss
Executive Summary
Sedco Capital REIT Fund delivered a strong operating quarter in QQ2 2025, with revenue of SAR 94.6 million and EBITDA of SAR 74.6 million, translating to an EBITDA margin of 78.9% and an operating margin of 60.5%. The core property portfolio continues to underpin healthy operating profitability, aided by cost discipline and lease‑related cash flows. However, investors should note that net income registered a loss of SAR 4.37 million for the quarter, driven by a substantial negative item within total other income/expenses of SAR −61.58 million. The underlying business appears cash‑generative (operating cash flow per share SAR 0.379 and free cash flow per share SAR 0.379) despite the reported net loss, underscoring the presence of non‑recurring or non-cash charges weighing on reported results. Liquidity remains adequate (current ratio 1.21) and leverage is moderate (debt ratio 0.503; debt capitalization ~0.54). The market trades at a price‑to‑book around 0.92 with a dividend yield of about 3.6%, positioning the stock as a potential entry for yield‑focused buyers should the one‑off items not recur. The key challenge is the sizeable negative “other income/expenses” that distorted quarterly profitability, which management will need to address to sustain earnings growth.
Over the longer horizon, the company’s Saudi REIT framework and diversified asset base offer growth avenues through rent escalations, portfolio expansion, and improved capital efficiency. The absence of explicit forward guidance in the disclosed materials means investors should monitor cash conversion dynamics, tenant mix, portfolio acquisitions, and debt maturity management going forward. The quarter’s statistically stronger operating metrics suggest favorable earnings momentum if non‑recurring charges normalize.
Key Performance Indicators
Revenue
94.59M
QoQ: 0.00% | YoY:111.82%
Operating Income
57.21M
QoQ: 0.00% | YoY:59.64%
Net Income
-4.37M
QoQ: 0.00% | YoY:-149.15%
EPS
-0.02
QoQ: 0.00% | YoY:-149.16%
Revenue Trend
Margin Analysis
Key Insights
Revenue: SAR 94,585,403; YoY growth +111.82%; QoQ growth +0.00%. Underlying revenue expansion reflects portfolio rent contributions and potential lease indexation in QQ2 2025.
EBITDA: SAR 74,607,689; EBITDA margin 78.89%; QoQ data not specified; consistent with strong operating profitability of the core portfolio.
Operating income: SAR 57,208,947; operating margin 60.48%; YoY growth in operating income +59.64% (implied by reported metrics).
Net income: SAR −4,371,456; net income margin −4.62%; YoY change in net income −149.15%; QoQ change not disclosed. Net result is depressed by a substantial total other income/expenses net item (SAR −61,580,403).
EPS (diluted): SAR −0.0234; YoY change −149.16%; weighted average shares 186,944,444.
Financial Highlights
Key metrics overview (YoY and QoQ where available):
- Revenue: SAR 94,585,403; YoY growth +111.82%; QoQ growth +0.00%. Underlying revenue expansion reflects portfolio rent contributions and potential lease indexation in QQ2 2025.
- EBITDA: SAR 74,607,689; EBITDA margin 78.89%; QoQ data not specified; consistent with strong operating profitability of the core portfolio.
- Operating income: SAR 57,208,947; operating margin 60.48%; YoY growth in operating income +59.64% (implied by reported metrics).
- Net income: SAR −4,371,456; net income margin −4.62%; YoY change in net income −149.15%; QoQ change not disclosed. Net result is depressed by a substantial total other income/expenses net item (SAR −61,580,403).
- EPS (diluted): SAR −0.0234; YoY change −149.16%; weighted average shares 186,944,444.
- Cash flow indicators: Operating cash flow per share SAR 0.379; Free cash flow per share SAR 0.379; Dividend yield 3.57%. Payout ratio reported as −10.69% (reflecting policy or one‑offs rather than a sustained payout cadence).
- Liquidity and solvency: Current ratio 1.213; cash ratio 0.477; quick ratio 1.213; Debt ratio 0.503; Debt to equity 1.178; Long‑term debt to capitalization 0.538; Total debt to capitalization 0.541; Cash flow coverage and short‑term coverage ratios indicate a conservative balance sheet with modest leverage and adequate liquidity.
- Valuation indicators: Price‑to‑book 0.917; Price‑to‑sales 13.84; Price‑to‑earnings negative; Enterprise value multiple 38.44; Dividend yield 3.57%.
- Working capital and efficiency: Receivables turnover 0.507x; Days’ sales outstanding 177.5 days; Payables turnover 0.239x; Days payable outstanding 375.9 days; Cash conversion cycle (CCC) −198.35 days, suggesting a cash flow profile where payables terms are unusually extended relative to receivables; asset turnover 0.0283; asset turnover and related cash efficiency metrics indicate a relatively modest asset turnover profile typical for diversified REIT portfolios.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
94.59M
111.82%
0.00%
Operating Income
57.21M
59.64%
0.00%
Net Income
-4.37M
-149.15%
0.00%
EPS
-0.02
-149.16%
0.00%
Key Financial Ratios
currentRatio
1.21
operatingProfitMargin
60.5%
netProfitMargin
-4.62%
returnOnAssets
-0.13%
returnOnEquity
-0.31%
debtEquityRatio
1.18
operatingCashFlowPerShare
$0.38
freeCashFlowPerShare
$0.38
dividendPayoutRatio
-1069%
priceToBookRatio
0.92
priceEarningsRatio
-74.84
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Earnings call transcript not provided in the data set for QQ2 2025. No management quotes or theme-based highlights are available from an earnings call within the supplied material. As a result, transcript-based themes (strategy, operations, market conditions) and direct quotes could not be extracted. If and when the transcript becomes available, we will incorporate key themes such as portfolio optimization, occupancy trends, rent escalations, capital deployment, and hedging strategies.
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Forward Guidance
No explicit forward guidance is disclosed in the provided QQ2 2025 data. Given the macro backdrop for Saudi real estate and the REIT segment, management commentary in an accompanying release would typically address occupancy trajectory, lease escalations, capex plans, dividend policy, and debt maturity management. In lieu of formal targets, the following assessment applies:
- Revenue and EBITDA: Underlying operating profitability remains solid (high EBITDA margin around 79% and operating margin around 60%), suggesting potential for revenue growth to translate into earnings if non‑recurring charges do not recur. Monitoring: tenant retention, lease renewals, and rent escalations.
- Balance sheet and liquidity: Current ratio >1 and debt metrics indicate balance sheet resilience, but the high DSO and extended payables terms imply working capital sensitivity to tenants’ payment patterns and vendor terms. Monitoring: debt refinancing needs, capex cadence, and dividend policy alignment with cash flow.
- Cash flow and distributions: Positive operating cash flow per share and free cash flow per share indicate cash generation strength; however, the negative net income and payout ratio imply management could prioritize balance sheet repair or selective capital returns. Monitoring: dividend policy consistency, sustainable FCF generation, and debt maturity profile.
- Market and volatility: In a competitive Saudi REIT landscape with peers exhibiting varied profitability profiles (e.g., peers reporting net margins in double digits versus the QQ2 2025 quarter’s negative net margin), investors should monitor occupancy trends, regulatory changes affecting REIT distributions, and cap rate dynamics.
Overall, the outlook hinges on normalization of the one‑off items driving the current net loss and continued execution on lease renewals, portfolio optimization, and disciplined capital deployment.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
4344.SR Focus
0.00%
60.50%
-0.31%
-74.84%
4339.SR
88.20%
81.00%
0.81%
21.52%
4330.SR
60.80%
10.20%
-2.20%
-8.92%
4348.SR
86.30%
85.80%
1.73%
11.34%
4342.SR
0.00%
67.20%
2.69%
10.25%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Neutral-to-cautiously-positive. The QQ2 2025 results underscore a robust operating core, evidenced by high EBITDA and operating margins, but the material negative net income caused by a large total other income/expenses item weighs on quarterly profitability and equity value. The stock trades at a discount to some peers on book value (P/B ~0.92) with a dividend yield near 3.6%, offering yield appeal if core earnings stabilize. Investors should monitor whether the one‑off charge is truly non‑recurring and whether the company can convert strong operating cash flow into sustainable earnings growth and consistent distributions. A constructive stance would be to wait for clearer earnings normalization and forward guidance on occupancy, capex, and debt maturity planning before upgrading the outlook.
Key Investment Factors
Growth Potential
Strong operating profitability on core assets (EBITDA margin ~79%, operating margin ~60%), with potential upside from rent escalations, portfolio optimization, and selective acquisitions within Saudi Arabia’s diversified REIT landscape. The negative net income is driven by a substantial other income/expenses item, suggesting room for earnings normalization if one‑offs do not recur. Free cash flow per share of SAR 0.379 supports optionality for increased distributions or debt reduction.
Profitability Risk
Key risks include the sizable other income/expenses charge that reduced net income this quarter, potential variability in tenant collections given high DSO (177.5 days) and long payable terms (375.9 days), and leverage sensitivity if interest and financing costs rise. Absence of explicit forward guidance adds execution risk until management clarifies the trajectory for distributions, capex, and debt maturity management. Competitive dispersion among Saudi REITs means relative performance will hinge on portfolio quality, occupancy, and cost control.
Financial Position
Solid liquidity with current ratio and quick ratio above 1.0; net leverage appears moderate with debt ratio around 0.50 and debt capitalization roughly 0.54. Cash flow metrics imply cash-generative operations, but the cost of capital and the one-off item have clouded reported profitability. Valuation trades at a premium to some peers on EV/EBITDA and P/S, but at a discount to peers with stronger net margins; price-to-book around 0.92 indicates the market is pricing the stock near its book value, potentially reflecting uncertainty around the one‑offs and the sustainability of recurring earnings.
SWOT Analysis
Strengths
Diversified Saudi REIT portfolio with Shariah alignment, enabling access to a broad investor base.
Robust operating profitability reflected in EBITDA margin ~78.9% and operating margin ~60.5%, indicating strong control of operating costs and stable rent income.
Positive operating cash flow per share and free cash flow per share, supporting liquidity and optionality for capital deployment.
Weaknesses
Significant one‑off/other income expense driving an apparently large quarterly net loss (SAR −61.58 million), obscuring core performance.
Net income margins negative for QQ2 2025, which may unsettle investors despite healthy operating metrics.
High days sales outstanding (177.5 days) and very long payable terms (375.9 days) indicate working capital dynamics that could constrain cash flow if conditions deteriorate.
Opportunities
Tenant retention and renewal opportunities with portfolio optimization could lift occupancy and rent growth.
Potential portfolio expansion in Saudi market aligned with Vision 2030 growth impulse and favorable REIT regulations.
Improvement in capital structure and payout policy as recurring earnings stabilize post non‑recurring charges.
Threats
Economic cyclicality in real estate and potential shifts in leasing demand could pressure occupancy and rent escalations.
Regulatory changes affecting REIT distributions, tax treatment, or capital deployment could alter cash flow profiles.
Competitors with stronger net margins and different leverage profiles could capture investor preference if QQ2 2025 results reflect structural weaknesses.
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