Today‘s Morning Meeting

Research evidence excerpt

Today‘s Morning Meeting

CEEMEA Equity Research

CEEMEA First to Market 25 June 2026

Today’s Morning Meeting | Also Published Today | Key Changes | JPM Events | Upcoming Earnings

Today’s Morning Meeting

| Leejam (Taher Safieddine, CFA) (LEEJAM AB, UW)

Margin weakness and LFL cracks overshadow the expansion story; D/g to Underweight

We downgrade Leejam to Underweight (from N) and lower our Dec-27 Price Target (PT) to SAR 72.4/share (-48% vs. prior PT),

implying 9% downside to last closing. Our UW thesis is driven by: 1) An ongoing aggressive center roll-out strategy which is

pressuring utilisation rates, membership yields and operating margins given the drag from newly opened centers (c. 18-30

months to reach EBITDA breakeven-maturity); 2) Increasing competitive intensity in the market coupled with still-challenging

consumer behaviour amid wallet pressure and down-trading; 3) Potential cannibalisation within the existing network which is

weighing on like-for-like (LFL) performance; 4) Our concerns with management's messaging on the Q1 26 results call around

initiatives to fix the core portfolio, which comes at a time where a significant share of the network remains in ramp-up; and 5) A

weaker medium-term fundamental profile with FY 25-28E CAGRs 3% on EBITDA and 0% on normalised net profit (JPMe

15%/20% below BBG consensus on FY 26E/27E EPS), set against a rich valuation, leaving risk/reward skewed to the

downside at current juncture. The stock has been weak YTD (down 20% vs. Tadawul General Index +5%), yet we see further

room for downside especially with weak earnings delivery and delay in P&L turnaround amid the ongoing business fix. We

await clear signs of stabilization in LFL performance, an inflection in the margin trajectory and an updated MT strategic plan