AlArabia (4071.SE): Model update: Reducing estimates and target price

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AlArabia (4071.SE): Model update: Reducing estimates and target price

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03 Jul 2026 12:44:26 ET │ 14 pages

AlArabia (4071.SE)

Model update: Reducing estimates and target price

CITI’S TAKE

We update our estimates, reflecting a soft start to the year and slower

Neutral / High Risk ramp of recent projects. While AlArabia has won several major contracts in

Price (02 Jul 26 15:00) SAR89.80 recent years (Table 1), doubled its billboard capacity between 2022 and

2025, and increased its market share in Saudi Arabia to ~80%, its net Target price SAR94.00↓

profit margin declined to 10% in 2025 from 25% in 2023. This was driven from SAR120.00

by a growing share of early-stage projects and high minimum guarantees Expected share price return 4.7%

(e.g., the Riyadh project), as well as a slower-than-expected rollout and Expected dividend yield 0.0%

utilization of new assets. The recent conflict in the Middle East has Expected total return 4.7%

resulted in further pressure on topline growth/negative operating

Market Cap SAR4,939M leverage, with KSA revenues down 29%YoY in 1Q26. We therefore reduce

US$1,315M our sales/EBITDA expectations for 2026/27e by ~13%/19% on average.

Our TP moves to SAR94 from SAR 120 mainly on earnings revisions. Our

revised TP puts AlArabia on ~7x 2027e EV/EBITDA. We remain

Neutral/High Risk. Maxim NekrasovAC

+44-20-7500-7264

KSA ad market was under pressure in 1Q26 — Sales in1Q26 declined by 22% YoY maxim.nekrasov@citi.com

(+19% growth in 2025), with c.29% decline in KSA, partially offset by ramping up of

projects in the UAE (+160%YoY) and Egypt (+110%YoY). Weak operating leverage with

fixed rent/minimum payments resulted in ~17pp GM decline leading to a 35% EBITDA

contraction YoY. With emerging signs of normalization in the region, we expect