Roemer Capital Initiates Coverage of Saudi Tadawul Group: A Long-Term Opportunity Amid Market Recovery

Roemer Capital is pleased to announce the initiation of coverage on Saudi Tadawul Group, identifying an attractive long-term investment opportunity as the Saudi equity market stabilizes following the impact of the Saudi Aramco placement.

The recent stock underperformance has largely been driven by declining trading volumes and a steady erosion of consensus EPS. However, we believe the current valuation better reflects the long-term growth outlook for revenues, earnings, and dividends.

Key drivers supporting our positive view include:

•      •      Improving Saudi macroeconomic outlook, creating a favorable backdrop for equities.
•      •      Broadening market dynamics, with over 55 companies in the IPO pipeline.
•      •      Increasing free float through privatization sales and rising retail investor participation.
•      •      Surging foreign inflows, up nearly 200% between 2020-2024.

“We see an attractive risk-reward opportunity for patient, long-term investors. While trading volume volatility remains a key risk, the stock is now positioned for a recovery. The alternative valuation models suggest an 18-25% upside by year-end, making STG an interesting alternative to banks within the financial sector,” said Alex Kantarovich, Head of Research at Roemer Capital.

Roemer Capital rates STG as Buy, with a Buy on Dips approach for strategic positioning.