Buy The National Company for Glass Industries | Tadawul 2150 | 35-38% gain | KSA stock investment idea on 08 Sep 2024

Introduction - Company Overview of National Company for Glass Industries (ZOUJAJ)

The National Company for Glass Industries, commonly known as ZOUJAJ, specializes in the production and sale of both reusable and disposable glass bottles, as well as float glass. Their product range includes standard glass packaging, simple bottles, jars, and tailored solutions.

Additionally, the company manages sand and gravel mines, complete with crushing facilities. Established in 1990, the National Company for Glass Industries is headquartered in Riyadh, Saudi Arabia.

Market Capitalization of National Company for Glass Industries is 1.7 Billion SAR.

Peer Companies and their respective Market Capitalization

1. OASIS (Tadawul 3007) - 831.38 Million SAR
2. ALRASHID INDUSTRIAL (Tadawul 9580) - 332.00 Million SAR
3. FIPCO (Tadawul 2180) - 552.00 Million SAR
4. TAKWEEN (Tadawul 1201) - 957.34 Million SAR

Technical Analysis - Is it the right time to take this trade?

• Analyzing the historical chart reveals that after reaching an all-time high of SAR 133.6 in February 2006, the stock underwent a significant decline, dropping to SAR 30.
• Although it rebounded from this support level to hit SAR 70, but encountered resistance there, causing the price to dip below 30 and eventually settle at SAR 18.5.
• Following this, the stock entered a lengthy consolidation phase, attempting to gain upward momentum.
• Unfortunately, it faced rejection near SAR 49, which pushed the price down to SAR 12.8.
• After another extended period of consolidation, the stock made an effort to break through the SAR 49 resistance in February 2021 but was unsuccessful.
• The price then consolidated once more. However, in September 2024, the stock finally made a successful breakout, achieving a significant milestone after nearly sixteen years.
• If the price can maintain itself above SAR 50, we could anticipate a robust rally in the near future.

Fundamental Analysis - How well is the company performing?

A. Revenue & Profit Analysis

1. Year-on-year

• In FY23, the company experienced remarkable revenue growth of 37%, reaching 153.9 million SAR, a substantial increase from 112.3 million SAR in FY22.
• Additionally, the gross profit margin surged to an impressive 22.3%, a significant rise from just 2.5% during the same period.
• However, operating income faced a downturn, with FY23 reporting 56.5 million SAR, down from 116.1 million SAR in FY22.
• Furthermore, the basic earnings per share (EPS) fell to 1.46 SAR in FY24, compared to 3.34 SAR in the previous financial year.

2. Quarter-on-quarter

• In the latest quarter ending June 2024, the company achieved a revenue of 34.3 million SAR, reflecting a nearly 9% rise from the 31.6 million SAR recorded in the March quarter. However, this figure represents a decline of approximately 12% compared to the same quarter last year.
• The operating income has risen to 27.9 million SAR, up from 24.5 million SAR in March. When looking back at the June quarter of the previous year, the operating profit has dramatically increased from a mere 2.3 million SAR.
• Additionally, the basic earnings per share (EPS) has improved, now standing at 0.81 SAR, compared to 0.70 SAR in March 2024.

B. Stock Valuation Analysis: Is the Stock Price Right?

1. P/E Ratio (Price-to-Earnings)

• This ratio compares the company's stock price to its earnings per share.
• The present P/E ratio is 18.9x, which is lower than the average P/E of 21.5x among its peers, indicating that the stock is fairly valued.

2. P/B Ratio (Price-to-Book)

• This ratio compares the company's stock price to its book value.
• The current P/B ratio is 2.2x, which is marginally above the peer average of 2.0x, yet it does not suggest that the stock is overvalued.

C. Cash Flow Analysis

• Cash flow from operations increased significantly in FY23, reaching 40.8 million SAR, up from 6.2 million SAR in FY22.
• In the latest quarter, cash flow from operations is at 7.5 million SAR, down from 11.8 million SAR in March.

D. Debt Analysis

• The company's total debt to equity ratio is 2.13%, and it now has a debt of just 16.1 million SAR. This debt has decreased from 36.0 million SAR over the past year.

E. Top Shareholder

• Riyadh Mohammed Abdullah Al-Hamidan
  • (Chairman, National Company for Glass Industries)
  • Shares Held - 18.667%

Conclusion

In summary, ZOUJAJ presents a strong case for long-term investors, combining encouraging technical signals with solid fundamentals. The recent breakout above SAR 50 could mark the beginning of a robust upward rally. With stable revenue growth, strong fundamentals, and reduced debt, the company is well-positioned for future gains.

Looking to start your investment journey? Subscribe now to get exclusive access to our Premium Stock Trading Advice for Saudi Tadawul and take a step toward building long-term wealth.