Yo, check it, another dollar mystery landed on my desk. Scientific and Medical Equipment House – real smooth name, huh? Listed on the Tadawul as ticker 4014, also goes by EQUIPMENT HOUSE. Seems this outfit went public back in February ’22. Now, they’re peddling tech solutions and services to hospitals and caterers in the Kingdom of Saudi Arabia. The reports pile up—moderate stability, falling earnings, profits playing hide-and-seek with actual cash. This ain’t no simple heist, folks. Gotta dig in and see what’s really cooking beneath the desert sun.
Gonna need more than instant ramen for this one.
Stability Versus Stagnation
First, let’s talk this “stability.” Seems like 4014’s stock is about as exciting as watching paint dry. The share price wiggles around a measly +/- 3% a week for the last three months. That makes it less jumpy than 75% of the other stocks on the Saudi Exchange. Now, some folks might see that as a sign of confidence. Me? I see a company stuck in neutral.
While 4014’s sitting pretty on its stable hill, the rest of the Saudi market’s been tearing up the asphalt. We’re talking a 15.2% return in the last year. So, while everyone else is making bank, 4014 shareholders are twiddling their thumbs. That stability ain’t looking so hot now, is it? It’s like driving a beat-up Ford in a Formula 1 race. Sure, you might finish, but you ain’t winning any trophies. This calls for a closer look under the hood, see why the engine’s sputtering. Is it the management, the market, or somethin’ else entirely throwing a wrench in the works?
The Case of the Vanishing Earnings
Now, here’s where things get interesting – and a little shady. The company’s earnings are disappearing faster than free donuts at a police convention. The average annual decline? A hefty -25.9%. Ouch. Meanwhile, the broader healthcare industry’s raking it in with an 18.8% earnings growth. That’s a massive gap, folks.
Seems like revenue’s creeping up at 8.8% a year, but even that’s not enough to stop the bleeding. Why isn’t that revenue trickling down to the bottom line? This smells like trouble. Could be they’re blowing cash on bad investments, could be their competitors are undercutting them, or it could just be plain old bad management.
But hold on a cotton-pickin’ minute. There’s a twist in this tale. It appears the real money being made is getting lost in translation between the profit on the books and what the business can actually spend. Over the past year, they’ve managed to rake in ر.س236 million in free cash flow—significantly more than the pathetic ر.س42.8 million in reported profit. That’s like hiding a gold bar in a pile of dirty laundry. The numbers suggest a strong cash conversion despite the low earnings. Maybe depreciation is high and masking strong free cash flow. If so, someone is sitting on a goldmine.
Cracking the Capital Code
Alright, let’s talk about how they’re using their dough. Return on Capital Employed, or ROCE, clocks in at 8.6% as of March 2025. That means for every buck they invest, they’re making about eight and a half cents back. The way the bean counters figure it is they take the EBIT (Earnings Before Interest and Taxes), divide it by the total assets minus current liabilities. In their case, that’s ر.س52 million divided by (ر.س901 million – ر.س301 million).
Return on Equity, or ROE, is sitting at 7.7%, with net margins at 4.7%. These numbers ain’t gonna win any awards, but they show the business has got its act together. The thing is, to really understand what these numbers mean, gotta measure to the industry standard. What’s everyone else making? From the looks of the situation so far, this outfit may be worth a lot more than its currently letting on, but time will tell.
Now, keep this in mind: back in December ’24 some smart aleck at TradingView was saying the stock looked bullish with buys at 52.1 along with stop-loss and target prices. But those are simply opinions, not some sort of cosmic truth.
Despite it all, shareholders seem to like what they see. Or at least, they ain’t panicking. May be they believe in the long-term promise.
The company doles out dividends through Saudi National Bank and makes sure that they can attend important meetings, so thats a good sign. They released a prospectus back in 2022 when they listed on the Tadawul, so they seem to check all the boxes. They’re not Nahdi Medical (TADAWUL:4164), but they also function under the same environment.
So what have we got? Scientific and Medical Equipment House (4014) is a head-scratcher, but there’s always something there. Sure, the earnings are down, but cashflow is up. The sentiment surrounding the stock is cautiously optimistic, especially since the company offers health-tech to Saudi Arabia. But ultimately understanding the stock is like climbing a tall mountain.
Alright folks, the evidence is in, the suspect’s been interrogated. Scientific and Medical Equipment House (4014) presents a mixed bag. The stock’s about as exciting as watching paint dry, but it’s churning out some serious cash. I recommend keeping on eye on it–this could be the next big thing.
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