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4163

Governance: C

ALDAWAA

Aldawaa Medical Services Co.

48.64 SAR / Share

As of: May 28, 2026

12.8x P/E Ratio Trailing 12 Months

2.8x P/B Ratio Price to Book Value

5.2% Dividend Yield Annual Dividend / Share

4.13B SAR Market Cap Total Valuation

0.82 Beta Systematic Risk Index

4.8% Net Margin Net Profit / Revenue

The Story

Al Dawaa Medical Services Company combines steady top-line retail expansion with a robust return profile, though recent margin compression and heavy lease-backed infrastructure commitments present near-term efficiency hurdles.

Source: Annual 2025 (2026-05-11)

Value Creation +4.4% 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

5.2%

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

-2.7%

Payout Ratio Percent of net profits distributed as dividends

66.6%

Net Margin Net profit margin generated from total operational revenue

4.8%

ROIC Return on Invested Capital

11.4%

Market Pricing Multiples

P/E Ratio Market value compared to corporate net earnings

12.8x

P/B Ratio Market capitalization compared to corporate book value

2.8x

EV / EBITDA Operating multiple reflecting core operational leverage

7.3x

EV / SALES Asset pricing multiple relative to total topline revenue

0.9x

Growth Story

Al Dawaa's growth story resembles a spreading oasis, steadily expanding its physical and digital footprint across the Kingdom. Revenue grew from 5.74 billion SAR in fiscal 2023 to 6.45 billion SAR in fiscal 2024, reaching 6.74 billion SAR in fiscal 2025. However, this top-line expansion is contrasted by a negative five-year average reinvestment rate of -23.39%, reflecting a business model that prioritizes capital distribution over heavy internal equity reinvestment. Consequently, the company's calculated sustainable growth rate stands at -2.68%. While the company continues to open new pharmacies—evidenced by capital work-in-progress and strategic investments like the acquisition of a 33.33% stake in National Parcel Stations Network Company for 10 million SAR—its long-term growth capacity is heavily reliant on external debt and lease financing rather than retained earnings reinvestment.

Profitability Dynamics

The profitability story is a friction-prone flywheel, where strong historical returns on capital face headwinds from rising operational costs. Al Dawaa remains a consistent value creator, boasting a five-year average ROIC of 11.44% that comfortably exceeds its WACC of 7.08%, yielding a positive value creation gap of 4.37%. However, margins have experienced compression; operating margin for the TTM ended in fiscal 2025 fell to 6.68% (with EBIT declining to 449.87 million SAR from 495.28 million SAR in fiscal 2024), and net profit margin compressed to 4.78%. This decline is partly driven by rising selling and distribution expenses, which reached 1.77 billion SAR in fiscal 2025, heavily burdened by 220.68 million SAR in right-of-use asset depreciation and 177.28 million SAR in property depreciation. While cash flow generation remains supported by supplier rebates and point-of-sale collections, the heavy reliance on lease-backed pharmacy locations creates a substantial fixed-charge drag on ultimate free cash flow.

Risk & Capital Structure

Beta Systematic market risk indicator relative to the TASI index

0.82

Cost of Equity Minimum required rate of return demanded by shareholders

7.9%

WACC Weighted average cost of total debt and equity funding

7.1%

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

55.3%

Risk Factors

Al Dawaa's risk profile is best understood as an anchored vessel in swelling seas, navigating heavy fixed lease commitments and regional macroeconomic shifts. The company's capital structure is highly leveraged when accounting for lease liabilities, which rose to 1.71 billion SAR in fiscal 2025, alongside short-term borrowings of 580 million SAR utilized for working capital. This leverage is reflected in a gearing ratio of 72% in fiscal 2025. Finance costs reached 129.46 million SAR, driven primarily by 69.78 million SAR in lease interest and 44.35 million SAR in loan interest. With a relevered beta of 0.82, the stock exhibits lower market volatility, but business-specific risks are prominent. These include supply chain and logistics vulnerabilities highlighted by recent regional geopolitical developments, the decision to liquidate four non-operating foreign subsidiaries (including Glanzzen and Ronzac GmbH), and a history of material prior-period restatements concerning import purchases, employee benefits, and bonus accruals.

Governance Disclosures

Rating: C

We track 8 key governance and oversight matters for this company in our database.

Significance: 7/10 Info Asymmetry

Concentration of Revenue with a Single Customer

The Group disclosed that revenue from a single customer amounted to SAR 1,702 million during the year ended 31 December 2025, representing a significant portion of the Group's total revenue of SAR 6,736.2 million.

Significance: 5/10 Tunneling

Related-Party Transactions with Entities under Common Shareholder Ownership

The Group engaged in transactions with entities under common ownership of the Group's shareholders, including travel expenses with Classic Travel & Tours Agency of SAR 26,170,864 and inventory purchases with Mawarid Trading Limited of SAR 173,662.

Mitigating Factors: The pricing policies and terms of payment of transactions with the related parties are approved by the Group’s Board of Directors. The outstanding balances are unsecured, interest free and settlement occurs in cash.

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In-Depth Analysis