Flash Note: Saudi Tadawul Group. DR Launch a Major Boost to Volumes Potential

The Saudi Capital Market Authority (CMA) has approved the regulatory framework for the launch of Saudi Depositary Receipts (DRs), effective immediately. This initiative could significantly boost STG's trading volumes—a key revenue and valuation driver—which have shown a steady decline in recent quarters. We view this development as a major milestone in positioning the Saudi market as a global financial hub. While the upcoming 2Q25 results are expected to reflect ongoing volume deterioration, our attention is focused on the potential positive impact of the DR launch on STG's business. With a BEst 2026 P/E of 35x, sustaining STG’s premium valuation will require robust business growth over the medium to long term.