Retail Network Expansion And EV Charging Are Expected To Support Long-Term Earnings Stability

Catalysts

About Al Maha Petroleum Products Marketing Company SAOG

Al Maha Petroleum Products Marketing Company SAOG operates a network of fuel stations and related energy, lubricant, aviation and bunkering services in Oman and selected international markets.

What are the underlying business or industry changes driving this perspective?

• Ongoing expansion and revamping of the domestic retail network, including conversion of sites into full service centers with integrated fueling and charging, should lift throughput per station and support steady growth in retail fuel volumes and nonfuel revenue.
• Scaling the Saudi Arabia franchise model, with 17 new stations under construction and potential rebranding of more than 150 sites, positions the company to capture rising regional mobility demand and meaningfully increase consolidated revenue over the medium term.
• Rapid growth in lubricants, supported by new packaging capacity in Oman and widening export reach into Africa and neighboring countries, is likely to deepen higher margin product mix and enhance gross margin resilience against oil price volatility.
• Nonfuel businesses and planned Al Maha branded vehicle inspection and service centers create complementary income streams around the forecourt, which can improve operating leverage and support expansion of net profit margins.
• Early investment in electric vehicle charging infrastructure at existing and new service centers, enabled by rooftop power generation and partnerships with green mobility players, places the company to benefit from the gradual shift in vehicle technology while stabilizing long term earnings.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Al Maha Petroleum Products Marketing Company SAOG's revenue will grow by 2.7% annually over the next 3 years.
• Analysts assume that profit margins will increase from 1.3% today to 1.4% in 3 years time.
• Analysts expect earnings to reach OMR 7.7 million (and earnings per share of OMR 0.11) by about December 2028, up from OMR 6.6 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 18.1x on those 2028 earnings, up from 10.9x today. This future PE is greater than the current PE for the OM Oil and Gas industry at 11.0x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 22.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• Continued or sharper declines in international crude prices would further depress reported sales values in aviation and bunkering, which are linked to global benchmarks, potentially offsetting current cost efficiencies and putting pressure on revenue growth and net profit.
• The planned rapid expansion and acquisition of more than 150 fuel stations in Saudi Arabia introduces execution and integration risk, where delays, cost overruns or underperforming sites could dilute returns and weigh on consolidated earnings and net margins.
• In the long term, accelerating adoption of electric vehicles and broader green mobility initiatives could erode growth in refined fuel volumes faster than anticipated, especially if diversification into charging, nonfuel retail and services fails to scale quickly enough, pressuring revenue and gross profit margins.
• A prolonged period of fixed domestic fuel prices, combined with volatility in international oil markets and changing tariffs, may compress spreads between regulated selling prices and input costs, potentially reversing recent improvements in gross margin and limiting net profit growth.
• Expansion in higher margin lubricants and nonfuel revenue streams, including new packaging facilities and service centers, relies on successful market penetration in Oman, Africa and neighboring countries, so slower than expected uptake or increased regional competition could cap future revenue growth and limit further improvement in net profit margins.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of OMR1.1 for Al Maha Petroleum Products Marketing Company SAOG based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be OMR546.3 million, earnings will come to OMR7.7 million, and it would be trading on a PE ratio of 18.1x, assuming you use a discount rate of 22.5%.
  
• Given the current share price of OMR1.03, the analyst price target of OMR1.1 is 5.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.