Fighting well but fighting uphill: Neutral

Research evidence excerpt

Fighting well but fighting uphill: Neutral

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Othaim

Reinstating Coverage: NEUTRAL | PO: 6.10 SAR | Price: 5.87 SAR

SAR 6.10 PO; Othaim has rerated to a fair valuation 02 July 2026

We reinstate on Othaim at Neutral with a DCF-derived PO of SAR6.10, in line with the Equity

current share price (which has derated 27% in the past year vs. a flat Saudi index). We

see (i) Othaim leveraging its loyalty program to partially mitigate erosion in growth from Mohsen Ameeri >> Research Analyst

share loss to discounters and food-away-from-home, growing sales per sqm at a 1.2% Merrill Lynch KSA Company

CAGR 2025A–30E, (ii) strategic shift from unit growth to innovation as the driver of +966mohsen.ameeri@bofa.com112 993 741

sales growth, with 7% space growth 2025A–30E vs. 45% 2020A–25A but SAR2.2bn of Michael Jacks, CFA >>

cumulative sales to schools 2026E–30E (3.6% of total), and (iii) operating margins not Research Analyst

Merrill Lynch (South Africa)

returning to 2025A levels until 2028E amid e-commerce investments. +27 113 055 158

Unit growth is over, creative solutions for topline michael.jacks@bofa.comJameel Bakhsh, CFA >>

Othaim is already Saudi Arabia’s largest grocer by footprint: 94% of the population lives Research Analyst

Merrill Lynch (DIFC)

within 5km of one of its 416 stores, limiting future unit growth potential. LfL growth is +971 4 425 8252

also under pressure from dining out, which represented 48% of Saudi F&B consumption jameel.bakhsh@bofa.com

in 2025A vs. 31% in 2016A; and discounters, who we expect to grow share by 10pp to See Team Page for List of Analysts

15% by 2030E (vs. ~40% share in Europe). We see Othaim staying agile, generating 50-

100bps of annual growth uplift from loyalty and diversifying revenue streams with the