Valuation concerns, profit booking weigh on United Carton’s debut trade on Tadawul

Vijay Valecha , May 28, 2025, Zawya

Shares of Saudi Arabia’s United Carton Industries Company (UCIC) closed flat on Tuesday’s trading debut, with tariff threats, along with profit booking and overstretched valuations turning away investors, according to analysts.

Despite being nine times oversubscribed and raising proceeds to the tune of 600 million Saudi Arabian riyals ($160 million), the stock closed lower by 1.5% at 49.25 riyals per share, as against its offer price of 50 riyals.

The mixed performance was also visible on Wednesday with the stock dropping to lows of SAR 46.60 in early trade, with the last trade settling at SAR 46.85 by 2.30pm local time.

Vijay Valecha , Chief Investment Officer, at UAE brokerage Century Financial said that even though the stock opened 6% higher at 53 riyals apiece and had rallied as much as 9% later during the day, “signalling strong investor interest and participation in the IPO,” the stock’s overall performance was a result of a confluence of factors, “chief among them being concerns around valuation.”

“With a market capitalisation of approximately SAR 2 billion and operating earnings of SAR 124.7 million in 2024, the company is trading at a price-to-earnings multiple of 16.16x — notably above the Asia Pacific (developed) industry median of 13.53x. This premium may have tempered investor appetite at the time of listing,” Valecha explained.

he continued: “Additionally, the stock may have closed lower after a round of profit-booking, as some IPO participants were likely short-term traders aiming to capitalise on immediate listing gains rather than holding for long-term value. Lastly, although the company has limited direct exposure to [US President Donald] Trump’s tariffs, its industry could face some indirect pressures in the form of elevated input costs and softer demand from international customers impacted by tariffs.”

Profit booking

UCIC shares opened at SAR 53 and hit a high of SAR 54.5 within the first five minutes of trading before finally closing at a low of SAR 50.5 on day one.

Trading volume exceeded 17 million shares, representing approximately 1.5 times the 12 million secondary shares offered.

“It must be noted that the volume in the first five minutes was at 1.68 million shares. For comparison, the IPO was for about 12 million or 30% of the company’s total issued share capital, meaning that about 14% of the company’s floating shares were traded within the first five minutes alone. Given this, there was an immense profit booking after the price hit the high mark of SAR 54,” Valecha said.

Added pressures emerged from the “slightly stretched valuations,” he added. “UCIC is a corrugated company in the Developed Asia Pacific region. The median P/E ratio of the listed companies operating in the containers and packaging segment is approximately 13.5. Meanwhile, the P/E ratio for UCIC is approximately 16.2 (market cap of SAR 2.016 billion / net income from operations of SAR 124.7 million). This implies that UCIC is slightly overvalued in comparison to its peers.”

Flynas, SMC IPO

Following the UCIC debut, all eyes are on the Saudi Flynas IPO, with Specialized Medical Company (SMC) close behind.
 

“The market could find support as it continues to see strong interest in Saudi IPOs, including the upcoming Flynas listing. Successful IPOs could help attract local and international capital to the stock market, which could help stabilise prices,” Valecha said.

“The SAR 4.1 billion IPO of Flynas, which opened today for retail participation, while being about 100 times subscribed by institutions, indicates massive investor demand,” said Valecha . “On the other hand, Specialized Medical Company (SMC) extended its book-building period to allow qualified investors to review their bids, while postponing the retail offering period to June 15.”

SMC has though confirmed its commitment to the IPO, stating the listing remains on track, and the business fundamentals and long-term growth strategy remain unchanged.
 

One deal still awaiting an intention to float is Ejada Systems, with its Capital Market Authority approval expiring on June 23.

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