Riyadh: Tassnief has assigned long-term national scale entity rating from “(A)’’ (Single A) and a short-term entity rating of “T-2” to SAL Saudi Logistics Services Company (‘‘SAL’ or ‘‘the Company’’). Tassnief has also assigned A (Single A) rating to the Company’s unsecured, corporate Sukuk program. The assigned ratings reflect high creditworthiness, thus very low credit risk. Risk profile may vary with changes in economic / sector conditions.

Rating Rationale: Assigned ratings to SAL Saudi Logistics Services Company reflects the Company’s market leadership position in national air-cargo handling operations, extensive physical infrastructure, strong business and financial risk profile, sound governance and control framework and strong shareholder profile and synergies.

SAL exhibits a sound business profile, supported by eight-decade operating history within the Kingdom’s aviation and cargo ecosystem and leadership in national air-cargo handling operations. This is evident from large-scale handling activities across 19 airport stations, offering an integrated suite of airside and landside services under multi-year contracts with major domestic and international airlines. Going forward, a multi-year expansion program is underway to nearly double capacity of Gound Handling by 2030, with major upgrades planned at Riyadh, Jeddah, Dammam, and Madinah airports. Business risk profile is also supported by expected double digit growth in cargo volumes till 2030 although competitive intensity remains high despite a duopoly market structure.

Beyond its core handling operations, SAL Logistics division is expanding its logistics business, enabling deeper integration with downstream distribution networks. The multi-year expansion program also aims to increase Logistics division capacity by five-fold by 2030. The Company is also progressing with the development of its zone operations division to capitalize on structural warehousing demand, providing long-term potential for high-margin, recurring revenue from integrated logistics parks. Tassnief expects expansion initiatives to translate into a more diversified business profile and enhance business stability although key execution and market risks remain.

Profitability profile of the Company is underpinned by sustained revenue growth and strong margins. During 2025, base-year impact resulted in temporary softness although long-term growth outlook is supported by organic growth from cargo handling business and diversification. Liquidity profile is supported by healthy cash flow generation, efficient working capital cycle and sizeable cash balances although ageing profile of receivables has some room for improvement. Rating also incorporates currently low leveraged capital structure with sound equity base and strong current and projected debt coverages and DSCR cushion despite aggressive expansion plans. A structured funding plan is in place for financing the aggressive capital expenditure planned over the rating horizon.

Rating Triggers: Ratings are expected to witness downward pressure in case of a material weakening in cash flow generation and a sustained increase in debt to FFO coverages beyond 5x. Tassnief does not expect an upgrade in ratings unless expansion plans near maturity and translate into an enhanced business and financial risk profile.

About the Company:  SAL is a Joint Stock Company registered in the Kingdom of Saudi Arabia under the commercial registration number 4030367493 dated October 16, 2019. SAL is the national logistics champion, providing cargo ground handling services at airport terminals, freight brokerage services, warehouse management services, administrative services and storage services.

For further information on this rating announcement, please contact the senior rating analyst Mr. Talha Iqbal (Ext. 6627) at +966-112506627 or email at RS@Tassnief.com.

RELATED CRITERIA AND METHODOLOGY

Rating Methodology for Corporate (v.2. 2024) can be found on the website:
www.tassnief.com