More Earnings Headwinds

Research evidence excerpt

More Earnings Headwinds

IdeaMits overall healthcare spend). Management expects the drag to narrow

through the year. (ii) Management flagged that it currently has c.45% share

of the program, below the estimated ~50-60% share we think the company

had prior to Nahdi's entry at the start of 4Q25. We discussed the expected

impact from Nahdi's entry into the program in a prior note here.

• #2 Expecting improvement through the year from the low Q1 base.

Management guided to 3-5% growth for the remaining three quarter of the

year, with the drop in Wasfaty sales expected to be more than offset by

growth in retail and other verticals. Operating income is expected to be

within 4-6% of sales through Q2-4, and capex <3% of sales. Management

expects to end the year with net store openings of 45, with the growth

second half weighted.

• #3 Quick commerce competition largely still personal care focused. Quick

commerce providers remain more potent competitors in the personal care

space as consumers increasingly favour convenience and speed of delivery. In

response, Al-Dawaa recently launched its Al-Dawaa Now service, delivering

in less than 30min and the Now service quickly rising to c.10% of its online

business. We note that Nahdi launched a similar offering last summer, giving

the company a c.1Y head start on the service. Management also believes (i)

the strength of its loyalty program, and (ii) extended assortment across

sectors will help mitigate the competitive threat from quick commerce

providers over the longer-term, while stating it sees less risk of quick

commerce players gaining share in traditional pharma.

• #4 Measures to enhance governance post reporting delays and trading

suspensions. Management attributed reporting delays (the company