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"Knowledge" and the search for value... A reading beyond the dust of numbers

In financial markets,
Price is what you pay,
Value is what you get.

What is currently happening to "علم 7203" in "TASI" is a real test of this rule.

When we look deeply into the numbers,
We discover that we are dealing with a company that is ahead of the market by steps,
But now paying the price of "excessive expectations."

1. Revenue Boom vs. Margin Pressures
The financial statements show that the company achieved tremendous revenue growth,

Jumping from 1.69 billion SAR in Q4 2023
to 2.53 billion SAR in Q3 2025.

We are talking about an annual growth (YoY) of 35.45%.

However, when looking at "Cost of Goods Sold,"
It increased from 1.10 billion to only 1.54 billion.

And although gross profit is growing strongly to reach 994 million SAR,
The market has started to notice fluctuations in profit margins.

While "علم" was operating with net margins approaching 27% in some quarters, it recently stabilized at 22%.

This small difference is what makes institutional investors reconsider their positions.

2. The Balance Sheet Puzzle: Asset Growth and Liability Inflation
The balance sheet of "علم" tells a story of fierce expansion.

Total assets jumped from 8.1 billion SAR to 10.9 billion SAR in less than two years.

This growth is driven by acquisitions and digital transformation.

Conversely, we see a spike in "Total Liabilities," reaching 7.43 billion SAR with an 85% annual growth in the last quarter.

This increase in liabilities, despite the company's strong financial position,
raises the "sensitivity" of the stock to any change in interest rates or slowdown in cash flows,

Which explains some investors' concerns.
--
3. Hidden Strength: Free Cash Flows
What truly distinguishes "علم" is not just net profit,
But its ability to generate cash.

Cash flows from operating activities amounted to 823 million SAR in the last quarter, and (Free Cash Flow) stabilized at 733 million SAR.

This "cash machine" is what allowed the company to increase dividend distributions,

From 3 SAR per share in 2021
to 7.50 SAR in 2024,

With a dividend yield (Dividend Yield) exceeding 1.25% despite the significant rise in the stock price.

4. Valuation: Is the Price Fair?
Looking at the P/E ratio (P/E Ratio),
The stock is trading at a multiple of 25.38 (based on the current price of 679 SAR).

Although it is less than its peak that exceeded 55 times in early 2024,

It is still considered a "premium" compared to the tech and services sector.

The P/B ratio (P/B) at 15.5 times reflects high confidence,
But also makes the stock vulnerable to sharp profit-taking with any shake in "TASI."

Summary:
"علم" has declined by 15% in a week, falling below the 800 SAR level,

This is a "healthy correction" for a gap that was widening between the price and book value.

The company is growing operationally very well,
But the market had already "priced in" this growth for the coming years.

We are facing a leading national company,
Solid numbers,
Impressive cash flows,
But smart investing lies in realizing that a "great company" does not always mean "a stock to buy" at any price.

Your opinion matters to me:
Do you think "علم" has approached attractive investment zones,
Or will the market pressure it to test the 600 SAR levels?

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