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4001

Governance: D

A.OTHAIM MARKET

Abdullah Al Othaim Markets Co.

5.93 SAR / Share

As of: May 28, 2026

22.2x P/E Ratio Trailing 12 Months

4.3x P/B Ratio Price to Book Value

8.8% Dividend Yield Annual Dividend / Share

5.34B SAR Market Cap Total Valuation

1.01 Beta Systematic Risk Index

2.2% Net Margin Net Profit / Revenue

The Story

Abdullah Al-Othaim Markets operates as a high-volume, low-margin grocery retail giant in Saudi Arabia, generating stable multi-billion SAR revenues but facing compressed margins and negative reinvestment rates.

Source: Q1 2026 (2026-05-17)

Value Creation +5.4% Excess Return on Capital (Spread between ROIC/ROE and Cost of Capital)

Cash Flow Payback — Estimated years of operating cash flows required to cover Enterprise Value

Performance & Distributions

Dividend Yield Trailing annual dividends paid relative to share price

8.8%

Sustainable Growth Rate Rate at which company can grow internally using reinvested profits

-0.4%

Payout Ratio Percent of net profits distributed as dividends

194.7%

Net Margin Net profit margin generated from total operational revenue

2.2%

ROIC Return on Invested Capital

11.6%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

22.2x

P/B Ratio Market capitalization compared to corporate book value

4.3x

EV / EBITDA Operating multiple reflecting core operational leverage

13.2x

EV / SALES Asset pricing multiple relative to total topline revenue

0.9x

Growth Story

Al-Othaim's revenue has shown steady but moderate expansion, growing from SAR 10.23 billion in FY 2023 to SAR 10.76 billion in FY 2024, and peaking at SAR 11.09 billion in FY 2025, before settling slightly to a TTM level of SAR 10.91 billion. Despite this top-line scale, the company's long-term growth capacity is constrained by its negative 5-year average reinvestment rate of -3.41%. This negative reinvestment, typical of mature retail models that distribute substantial capital or rely heavily on leased assets rather than heavy equity capital expenditure, yields a slightly negative sustainable growth rate of -0.40%. While the company continues to expand its physical footprint, its growth is driven more by incremental market penetration and volume rather than heavy capital compounding.

Profitability Dynamics

Operating in the highly competitive grocery retail sector, Al-Othaim runs on thin margins, with a TTM operating margin of 3.02% and a net profit margin of 2.20%. TTM EBIT stands at SAR 329.57 million, yielding a NOPAT of SAR 316.06 million. Despite these narrow margins, the company is highly efficient at creating value from its deployed capital. Its 5-year average ROIC of 11.62% comfortably exceeds its WACC of 6.26%, creating a positive value-creation gap of 5.36%. This profitability is bolstered by high asset turnover and steady cash generation from its core retail operations, alongside supplementary income from its real estate leasing segment and equity-method investments in associates like Riyadh Food Industries and AlWousta Food Services.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

1.01

Cost of Equity Minimum required rate of return demanded by shareholders

8.7%

WACC Weighted average cost of total debt and equity funding

6.3%

Debt-to-Equity Ratio Proportion of corporate funding financed by debt creditors

94.5%

Risk Factors

Al-Othaim's risk profile is heavily shaped by its capital structure and operational commitments. The company carries a substantial debt load of SAR 5.04 billion against a cash balance of SAR 101.89 million, resulting in an enterprise value of SAR 10.28 billion. This high debt figure is primarily driven by lease liabilities associated with its extensive store network, which exposes the company to significant fixed-charge obligations, as reflected in finance costs on lease contracts of SAR 37.56 million in Q1 2026. Additionally, the company faces macroeconomic and geopolitical risks, including supply chain disruptions and foreign currency translation losses from its Egyptian subsidiary due to the ongoing devaluation of the Egyptian Pound. With a relevered beta of 1.01, the stock moves in tandem with the broader market, reflecting its defensive yet highly leveraged operational profile.

Governance Disclosures

Rating: D

We track 12 key governance and oversight matters for this company in our database.

Significance: 5/10 Tunneling

Lease Transactions with Entity Related to the Chairman

The Group made lease liability payments of SAR 5,352,062 to Abdullah Al-Othaim for Investment Company, an entity related to the Chairman of the Board, and received lease payments of SAR 17,466,000 during the period ended 31 March 2026. Additionally, the Group owed SAR 10,293,361 to this entity as of 31 March 2026.

Mitigating Factors: Management of the Group approved a policy for prices and conditions for transactions with related parties.

Significance: 5/10 Info Asymmetry

Related-Party Transactions with Riyadh Food Industries Company

The Group engaged in significant transactions with its associate, Riyadh Food Industries Company, including inventory purchases of SAR 19,685,834 and labor revenues of SAR 13,925,043 during the period ended 31 March 2026. As of 31 March 2026, the Group had an outstanding balance due to Riyadh Food Industries Company of SAR 28,813,192.

Mitigating Factors: Management of the Group approved a policy for prices and conditions for transactions with related parties.

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In-Depth Analysis