Mohammed Al-Khubani: And supply and growth, the risks and the mitigation to have a better data to basically share an updated guidance. Now with the recent geopolitical continuation of the geopolitical situation that happened at the H1 and now apparently it is sort of continuing to affect the reminder of the year. We are delivering a very strong Q3 and Q4, inshallah, will continue to deliver with the same momentum of Q3. So inshallah, it will be boosted, but it will not fully compensate the deficit that we have in the H1, which was around SAR -43 million. Hence, if we adjust for that, our full year EPS growth or bottom line will be between -2% to 3%, again, with a range that we will see towards the end of the year.
Mohammed Al-Khubani: If we adjust for the one-time item, the SAR 80 million that I explained earlier, then we will be around between flat to -1%. Finally, I think considering the current situation, even considering the results from the whole sector and the market, I think if we manage to deliver these results this year and we continue to win with our guests, growing market share, and defend the current challenges and invest in the future, we believe that is a very, inshallah, strong position for us. So this is overall on the guidance. I am sure we will have more time on the Q&A. Now we will go to more details on the strategic initiatives for performance. Dr. Hossam.
Dr. Hossam Khattab: Salam alaikum. I will start with the first pillar that we usually start with, our people. As we usually communicate and start that we continue investing behind our people, especially when it comes to training. We have invested this year, 550,000 hours of training for our team and managed to reach 39% nationalization, plus definitely being and continuing being the best place to work. From a brand equity perspective, and this is for us, was a good celebration because this is a new record where we have reached to a brand equity of 7.5 points, which proves that still when it comes to the brand strength and the people choosing the destination for them, still Nahdi is the brand of top of mind for our guests. We continue monitoring our internal NPS, which is above 90 and above any benchmark, with a very high loyalty penetration among our guests.
Dr. Hossam Khattab: Last quarter was a quarter that we have managed to get a lot of awards. We celebrated for the third year in a row our CSR award, delivered by the Ministry of Human Resources and Social Development. At the same time, we have been selected within Ipsos and Kantar as the most influential brands. We have our CEO being, for the third year in a row, selected within the top leaders across the Middle East by Forbes. Another one that we want to highlight, one of the awards that we are very proud of, is our high standards of investor relation practices that we provide. We have won the Golden Award by MEIRA, which is something that we need to continue our relation with our investors and raising the standards.
Dr. Hossam Khattab: From strategic initiatives, the online contribution continues growing and accelerating, especially in the beginning of this 9 months, we reached to 30.6% contribution. This is definitely backed up with the launch of Now Delivery, which has accelerated our home delivery penetration, plus increased the contribution of home delivery within our business. Today, when we look to the healthcare sector, we see that Nahdi Pharmacy application is the second in the healthcare, and our NahdiCare clinic has jumped to the number 6 downloaded application within the Kingdom. Wasfaty continues to be a strategic initiative, and as we mentioned with you before, we will be monitoring quarter-over-quarter the transactions. The good thing is that we are continuing with the momentum of increasing the number of transaction quarter-over-quarter. Not talking year-over-year, quarter-over-quarter.
Dr. Hossam Khattab: We have in Q3 reached almost near to the 2.6 million transactions coming from Wasfaty. The good thing is the high NPS that we are delivering with Wasfaty transactions, which is 92, in line with our current business. Private label continue also the momentum of growth. We have reached to 19.1% this year and we are celebrating the merge or the growth of some of our brands, something like Babywell, which is a Saudi-made local brand. This year, inshallah, will be joining the SAR 100 million revenue club. This is something that we will continue focusing on to increase our local content as part of our private label strategy. Finally, is the healthcare. The healthcare continues its growth, as mentioned by my colleague, Mohammed Al-Khubani, 32% growth on the revenue in the first 9 months.
Dr. Hossam Khattab: Again, a continuous monitoring of our number of guests that we are serving. Last year, we served 2 million. This year, in the first 5 months, we managed to serve 1.7. Inshallah, we will cross the 2 million before end of the year.
Dr. Hossam Khattab: The good thing is that last quarter we entered a new region that we have never entered with our healthcare, which is the eastern region, and this is going to add another beat for our guests within a new area we have not existed with our healthcare facilities. Finally, I will leave you with the same purpose that we always leave you with. We exist to add beats to the lives of our guests every day, and we do whatever investments that is required to serve our guests in the best way and continue gaining their loyalty.
Operator: Ladies and gentlemen, we will now start the Q&A session. If you wish to ask a question, please raise your hand or send your question to all panelists in the chat box. Our first question comes from the line of Taha. Taha, you are unmuted. Please unmute yourself locally, introduce yourself, and go ahead.
[Analyst] (Mims Investments): Hi. Thank you so much. Taha here from Mims Investments. So, obviously this year or the last few years, we have seen a bit of a margin dilution because of your expansion into healthcare and regional expansion as well. So, what kind of a stable gross or operating margin should we expect in the next few years once things stabilize for you?
Mohammed Al-Khubani: Let me start by the overall margin, because as I said, gross margin versus the OpEx, it will continue to change, because the overall mix between OpEx and gross margin is completely different when it comes to clinic, as most of the cost in the clinic is part of the cost of sale. So hence, let us talk about the overall operating or net margin.
[Analyst] (Mims Investments): Okay.
Mohammed Al-Khubani: Definitely on that, there will be a contraction, as you can see, either from the increased competition. We definitely see on the short term that there will be a contraction. Our objective is to grow the EPS, but the margin will be slightly declining. Then hopefully the mid to long term, as per our five-year strategy, we will also start growing the margin once the clinics, because the clinic level, again, net margin is almost double the current retail net margin. So, on the short term, there will be a margin dilution and hopefully mid to long term we will start growing even, Inshallah, the margin.
[Analyst] (Mims Investments): Understood. On the non-pharma category, are you facing competition? In the sense obviously there is competition, but have your own prices optimized or further optimization of prices is required to be competitive versus the global market in the non-pharma category?
Mohammed Al-Khubani: The optimization of the prices we have shared with you, if you followed us in the last 3 years, we have taken this action in Q4 2023, which was fully materialized in 2024 with a very clear strategy of benchmarking our prices versus the home country of the brands, which is the global pricing in the globe, plus the logistics cost definitely between these countries and Saudi. Overall, this has been stabilized since 2024 and accordingly, our gross margin will be stabilized within the same page. What we are talking about and what our finance VP is sharing, Abu Hamza, is that today the mix is changing, not in terms of optimizing on pricing as much as between the mix between online and brick-and-mortar, as an example.
Mohammed Al-Khubani: The shift between the growth or the accelerated growth that is happening from the healthcare, which will have definitely an impact on the gross margin. But at the same time, because of the lighter OpEx that both are carrying and the operating margin, this will have an enhancement on the operating margin and profitability on the long term. This is how we are focusing on. On the short term, it will have as long as we are still in the investment mode, but on the longer term, this should be actually reverse.
[Analyst] (Mims Investments): Okay. Just to reiterate, in terms of competition with online retailers, are you right now, you feel there is still competitiveness that you have to follow in terms of price rationalization, or you feel most of it has already been done now versus in online retailers for the non-pharma category?
Mohammed Al-Khubani: Alhamdulillah, this year it was one of the great years in terms of market share gain that Nahdi has witnessed. It is one of actually the highest market share gain that happened within a year, which proves that our strategy in terms of offering is in the right track.
[Analyst] (Mims Investments): Understood. Thank you so much.
Operator: Thank you, management. The next question comes from the line of Hassan in the chat box asking, what is the margin of Wasfaty sales versus non-Wasfaty, and what is the mix of pharma versus non-pharma items?
Mohammed Al-Khubani: I can answer the second half of the question, which is the mix between the pharma and the non-pharma. This already has been communicated previously in our prospectus. It is almost 50/50, between the front shop and the pharma. In terms of margins by segment, we do not communicate it.
Operator: Okay, thank you, management. Our next question from the chat box from Shafiq, asking: How many new stores and clinics are you planning for 2027? When do you expect healthcare and UAE business to start adding to profit?
Dr. Hossam Khattab: Okay. That is two questions. Let us take the first part. How many new stores and clinics are you planning for 2027? This is too early to communicate. Definitely in Q1 guidance and guidelines, this is where we share the 2027. What I can share with you is our strategy of opening. Today, we have a very robust AI tools that can allow us to do the right openings, whether for the clinics or for our stores, in line with the online penetration that we are witnessing within the kingdom. This tool we are following to make sure that we are sticking to our strategy, which is being 5 minutes away from 95% of the population, and this is what we are progressing with and will continue doing as we go.
Dr. Hossam Khattab: In terms of when do we expect healthcare and the UAE business to start adding to the profit, as we have clearly mentioned in the past, the mature clinics and the mature stores, they are doing profit, but we are in the investment mode, and this will take its time, until we have more of the mature stores and mature clinics that can cover for the investment. This will definitely take a short-term investment that we have communicated before.
Operator: Thank you, management. Our next question comes from the line of Rashad. Rashad, you are unmuted. Please introduce yourself and go ahead.
Rashad Kawan: Hi, guys. Salam alaikum. Rashad Kawan from Morgan Stanley. Congrats on the results. My first question, I know you mentioned it is early, and I appreciate that to have full visibility into next year. I know that there is a lot of moving parts. But with the logistics and transportation cost headwinds you are seeing and the level of competition in the sector, plus the expansion strategy within the clinics, do you think you can be in a position to grow earnings next year? If you can, on a related note, talk about the increase in cost headwinds you have been seeing between Q2 and Q3 and how you have managed it, that would be great, because I assume headwinds have increased through the quarter, but obviously correct me if I am wrong.
Dr. Hossam Khattab: Yes, this is definitely, as you mentioned, it is too early to conclude on this. I think we are all in a time that we do not know what will happen tomorrow. We cannot conclude, or I cannot give you a guidance on this. But as Nahdi and as we have always been doing, we always plan for the future. But definitely, we have a lot of tools that we can utilize to secure our margin. Today, our private label contribution is growth year over year is a wonderful tool that can help us to enhance our profitability, and this is something that we will continue focusing on and actually focusing even more in 2027, to support any hits that can come on the profitability.
Rashad Kawan: Just on the cost increases between Q2 and Q3, have you seen a significant increase in transportation logistics costs, or is it kind of similar to what you have been seeing in Q2?
Dr. Hossam Khattab: I think it is almost the same. It is not a big difference.
Rashad Kawan: Okay. Last one for me, if I can. We have seen globally and in Saudi over Q3 that incidents for cold and flu and influenza were much higher year-over-year. I think the season seems to have started much earlier this year. Was that a factor in the strong top-line growth you reported?
Dr. Hossam Khattab: It is not. Actually, because seasonality is this year, if you compare it to last year, last year it was even higher in terms of the number of cases and seasonality effect, and we monitor this on a regular basis. There is definitely seasonality that happens every time in September, October. Overall, the growth now is coming and not behind the seasonality factor. It is happening behind the other aspects across the business.
Rashad Kawan: Okay, can you break that down a little bit more, if you can, in terms of what the drivers were? Because I know you talked about both pharma and the front shop, but are there any categories that are growing way ahead of others?
Dr. Hossam Khattab: The good news is that we are growing across all our divisions, and this is, again, if you remember in our previous meetings, it shows how Nahdi is very well diversified when it comes to its portfolio. So we are running with five divisions, which is the medicine, the wellness, beauty, mom and baby, and the personal care. The five has shown good growth momentum in Q3. That is, if you want to give some highlights, definitely GLP-1 continue to grow in this quarter. The other one, beauty, has an accelerated growth that is doing very well. We have also some care and mom and baby, a decent growth that is showing.
Rashad Kawan: Okay, excellent. Congrats again. Thank you very much.
Operator: Thank you, management. Our next question comes from the line of Michael Salama. Michael, you are unmuted. Please go ahead.
Michael Salama: Thank you. Thank you for the presentation. Question from my side. You mentioned the increase in import costs and potential supply chain delays. Do you see this as potentially squeezing out smaller players that might be struggling to meet the costs or actually securing supply into Saudi on the non-pharma, specifically?
Dr. Hossam Khattab: I don't think so. I think that the SFDA and the Ministry are working very hard to secure all the available stocks and logistics for all the markets. We all live in Saudi, and we see there is no shortage, Alhamdulillah, in any of the stocks. I don't think this should interrupt any retailer from getting their stocks on time.
Michael Salama: Okay. Another question. We have seen the announcement on the increase in electricity prices. Do you have an estimate of how much that is going to impact you next year?
Dr. Hossam Khattab: This was just announced, so we are in the process of evaluating, and we will share if there is any impact on the due course.
Michael Salama: Okay. Finally, with the Wasfaty growth that you are seeing, is there new traffic that is coming into your stores? Are you able to attract new customers? I am just trying to assess the cross-selling potential from Wasfaty. Has this materialized, or it is still too early?
Dr. Hossam Khattab: Definitely, there is an increase in traffic that came with Wasfaty, and there is a cross-sales that we have shared before, which is almost 10%. Yes, it is adding to the overall Nahdi performance.
Michael Salama: All right. Thank you very much.
Operator: Thank you, management. Ladies and gentlemen, in the interest of time, please limit your question to one to allow time for everyone. We are taking our next question from the chat box, asking if you are expecting any inventory buildup.
Dr. Hossam Khattab: We monitor our inventory in line with our cash, we run with a very strong AI module that we have installed this year that guides us in the right optimization of inventory and cash generation. Alhamdulillah, as you see today, we have a very decent cash position, which shows the efficiency that we are creating between inventory and cash.
Operator: Thank you, management. Our next question comes from the line of Anuj. Anuj, you are unmuted. Please go ahead.
[Analyst]: Hi. Salaam Alaikum. Thank you so much for the wonderful presentation. I have got this question regarding the perfume category. Could you please share the performance metrics of this category? Is this category a margin accretive or dilutive? What would be the current levels of revenue contribution from this category?
Dr. Hossam Khattab: Perfume category is a big opportunity. We know this is a SAR 7 billion business in Saudi, and we are just scratching the surface in this category. There is room to grow in the future, and we will continue investing behind it till we get our fair market share.
[Analyst]: Right. Another question regarding Wasfaty program. How much would it contribute in the Q3 top line? If there is a number you can guide us.
Dr. Hossam Khattab: As we said, again, we do not go to this level of details, and we do not share these percentages.
[Analyst]: Yeah, no worries. Thank you.
Operator: Thank you, management. The next question in the chat box comes from Mohammed Talha, saying, if we talk about retail sales growth excluding new stores opened, ramped up stores, and Wasfaty impact, then how much is the retail stores growth in 9 months 2026 versus 9 months 2025?
Dr. Hossam Khattab: The good news is that this year we almost closed and opened the same number of stores. This is, as I mentioned, with the new AI tool that we have generated, it is actually helping us to do the right format in the right location in line with the growth of online and delivery across the kingdom. There is no new stores that I can exclude to give you our growth. Our growth numbers is the growth numbers with the same number of stores.
Operator: Thank you, management. Our next question in the chat box comes from Shafiq, saying, will the Q3 retail growth driven by more higher volumes or higher prices? Where do you see gross margin settling as online and healthcare keep growing?
Dr. Hossam Khattab: The growth is coming not from prices, it is coming from number of transactions and volume, which is in line with our brand equity growth that happened in Q3. If I relate anything, I would relate is winning with our guests. We have the right mix, and people are choosing to come to Nahdi and buy from that.
Operator: Thank you, management. Ladies and gentlemen, I would like to remind you, if you have any further questions, please raise your hand or type it in the chat box. We have a question in the chat box from Marina asking, how would you quantify the impact of the geopolitical tension, and how do you see affecting GPM in Q4 and 2027?
Mohammed Al-Khubani: Thank you very much for this good question. I think as we have clearly seen in the last few months, it is becoming very dynamic and it is definitely a VUCA time for everyone. Uncertainty is the name of the game today. So we in Nahdi focus on a few key principles, which I would love to ask the investors to take note of. One is we will remain true and obsessed with our guests. Come what may, we will always focus on adding beats to our guests' life, and they will always be in the center stage of everything we do, more prime to anything else, whether it is margin or sales or anything, because we know for a fact that we play a significant role in the millions of guests who trusted us with their health and wellness. So that is principle number one.
Mohammed Al-Khubani: Principle number two is we will always work on differentiating our business by innovation and through providing for guests with omni-channel and omni-health solutions and follow and exceed their expectations. Whatever happens around us today is happening so fast, so we are increasing the agility of the business to make sure that we exceed our guests' expectations. The evidence on that is what happened with us since we launched Nahdi Now, which I think today is contributing a lot to the very healthy growth that we are witnessing on the top line and to the increasing guest satisfaction on our NPS score that we see every day. The good news is, Alhamdulillah, today at Nahdi, through external third-party measures, we are the number one Saudi retail in terms of guest satisfaction.
Mohammed Al-Khubani: Our NPS score is higher than all other retailers, not only in the pharmacy but in other sectors as well. That confirms our ability to innovate and differentiate. The third one is we will continue working on our resilience. We are in a big ship. We are steering this big ship in the middle of perfect storm and resilience is very important, through several things. One is very tight cost management, which is going to focus our investment where it matters to deliver on our purpose of adding beats to our guests' life and building the long-term value for our stakeholders, including investors, and make sure that we invest when everyone else is pulling back.
Mohammed Al-Khubani: I would like to share a very good news that we have just recently opened our 15th NahdiCare clinic in Dammam City, which is our first expansion in the eastern province to serve our guests over there. That is reassuring that we are on our strategy. We will not change strategy by the day, but we will have flexibility, agility, and resilience. Last but not least is engagement. Engagement with our guests, engagement with our people, the Nahdawiya, engagement with our community and the regulators, engagement with our investors, like what we are doing today. You all have seen the golden award we have been awarded with MEIRA. So basically, engagement is the name of the game and transparent communication as we go. So we will be managing this business by purpose, by values, by key strategies, and those are our principles.
Mohammed Al-Khubani: Now, whatever comes what may in Q4 or in 2027, we will deal with it with the best of our principles and knowledge. So the answer for the margin is margin is not our priority, the guest is. We will always fulfill our role as part of the healthcare system in Saudi Arabia to drive our resilience, our reach, availability of our key products to the guests in the 145 cities around Saudi Arabia, and to contribute to the resiliency of the healthcare in Saudi Arabia. I hope that answers. It is a long answer to a short question, but I just wanted to let everyone know how we are navigating this ship in the middle of the perfect storm.
Operator: Thank you, management. Another question from the chat box asking if you are planning to freeze branch expansion and focus instead on growing your online business.
Mohammed Al-Khubani: Say again, please.
Operator: Do you plan to freeze branch expansion and focus instead on growing your online business?
Mohammed Al-Khubani: As I mentioned very clearly, we will continue investing to deliver best-in-class services and adding beats to our guests. We will always do everything possible to ensure that we are providing our guests with the service they need wherever they need it.
Mohammed Al-Khubani: We will not be guided by short-term wins as much as by the long-term support to our guests.
Operator: Thank you, management. Our next question comes from the line of Rahaf Alhussain. Rahaf, you are unmuted. Please introduce yourself and go ahead.
Rahaf Alhussain: This is Rahaf Alhussain from Hassana Investment Company. Thank you, management, for the presentation. If you could, please explain the reason behind the downward revision in the guidance. Apologies if you have explained it before, but I was not able to hear you.
Mohammed Al-Khubani: As I said, we have a window to basically update our guidance and budget, and it is in Q3. We did a full bottom-up exercise to review what are the risks and mitigations. The geopolitical situation and the continuation of it that happened in the H2 was the key driver for the revised revision. We anticipated that Q3 and Q4 will be, inshallah, driving growth. We delivered that in Q3. Inshallah, we delivered that also in Q4. As I explained, the full impact that happened in the H1, which was around -9% growth, we cannot fully offset that as the geopolitical situation impact continued with us in the H2.
Rahaf Alhussain: That is clear. Thank you so much.
Operator: Thank you, management. Our next question comes from the line of Abdulrahman Al-Agail. Abdulrahman, you are unmuted. Please introduce yourself and go ahead. Abdulrahman, can you hear us? We will be taking the next question from the chat box, asking how to assess the competitive threat from Bupa CareConnect and Mina Clinics.
Mohammed Al-Khubani: We do not see this as a threat. We see this as a complementary business. We have a very good relation with both companies, whether it is Tawuniya or Bupa, and we will continue having this relation. The size of the market for the primary healthcare is much bigger than the number of polyclinics that is existing today in the kingdom, and the market is huge, and it is actually growing with a very high pace today with the new awareness of guests that they need to visit the primary care before visiting the hospital. I think the market is so big that it can absorb Mina and Bupa CareConnect and NahdiCare Clinics.
Operator: Thank you, management. Ladies and gentlemen, I would like to remind you if you have any further questions, please raise your hand or send it to all panelists in the chat box. We have a question in the chat box asking: is Babywell and other private label are exclusively being sold in Nahdi stores or Nahdi sells it to other distributors?
Mohammed Al-Khubani: It is a brand owned by Nahdi and sold in Nahdi.
Operator: Ladies and gentlemen, I would like to remind you, if you have any further questions, please raise your hand or type it in the chat box. We have a question in the chat box asking: what was the major contributor to Q3 bottom line growth given that gross profit was weak? What led OpEx savings and below EBIT gains?
Mohammed Al-Khubani: As I explained, there is a business shift mix, so definitely there are efficiencies to help offset the risk that we have. But the key contributor to the decline in the gross margin and the improvement in the OpEx margin is due to the shift because, as I said, the clinic, the healthcare business, most of the costs are not OpEx, they are cost of sales. Same for the online, it has a lower gross margin, but it has a lighter OpEx, hence it is a business shift mix.
Operator: Thank you, management. Another question in the chat box asking: as we know that online and Wasfaty share revenues are increasing, which are having lower margins, will that cause the gross profit and EBIT margins to moderate despite the rising in the private label share revenue?
Mohammed Al-Khubani: Yes. This is how we monitor it. It is not only the private label. There is another factor, which is the mix.
Dr. Hossam Khattab: We have within our portfolio and definitely, the more you focus on the margin enhancers, it helps to balance the overall gross profit. This is how we look to the overall picture in that.
Operator: Thank you, management. Our next question comes from the line of Abdulrahman Lagil. Abdulrahman, please go ahead. Abdulrahman, you are not audible. In the meanwhile, we can take our next question from the line of Rahaf Alhussain. Rahaf, you are unmuted.
Abdulrahman Al-Agail: I am sorry, but I was-
Operator: Yeah, we can hear you now, Abdulrahman.
Abdulrahman Al-Agail: Yeah. Thank you, management. So, this question for Abdulnaby. I would like to know if you are exploring any new business lines that would become new engine growth other than clinics and e-commerce.
Mohammed Al-Khubani: Abdulrahman, I am happy to hear your voice once again. If I just emphasize on one important point. In our strategy, the HEART BEATS, the S at the end of the BEATS stands for seeding for the future. As we have done years ago, when we seeded the online business, today online is close to SAR 3 billion and 30% of our business. The same way we have seeded for healthcare when it was a dream that was very difficult or almost near to mission impossible. We have today, managed to establish, Alhamdulillah, what we believe is a very successful, repeatable omni-health model. We will continue, my promise to you is we will always continue to do different levels of innovation. What do I mean different levels? We are not only talking about mega innovations like healthcare or online. We are talking about innovations like global as well.
Mohammed Al-Khubani: If you remember when we were first in Saudi Arabia to do B2C, and serve our guests with a major VMS category and other important smaller innovations, but that contributes to the community like EZ-Pill and many others, like the robotic in our pharmacies. So many innovations. So this innovation, Abdulrahman, this business thrives with innovation, and we will continue investing in that and using our knowhow and knowledge, and more importantly, using global experts and global knowhow and learning from the best around the world. As the chief commercial officer mentioned, we use AI today to advance in our inventory optimization, in our promotion investment and optimization, in our guest engagement, in all the productivity enhancement initiatives, in choosing our network and optimizing our network investment and balance between brick and mortar and online.
Mohammed Al-Khubani: I have to share with you that, Alhamdulillah, we have a very solid and sound AI strategy which balances between doing what is right for our business and our guests and not over-investing, but not under-investing in AI to see the benefits on adding beats to our guest life. So the answer to your question, Abdulrahman, is we will always continue. We will evaluate and I do not know if you have read the book, "Great by Choice," but they talk in that brilliant management book about fire bullets before you fire the cannonball concept. I wish if people can search it. So in Nahdi, here, we always start by piloting small initiatives here and there, and wherever we see value emerging, we develop and we build, and we scale up eventually, like what we are doing and what we have been doing. Thank you for this question, Abdulrahman.
Abdulrahman Al-Agail: Thank you.
Operator: Thank you, management. Our next question comes from the line of Sarah. Sarah, you are unmuted. Please go ahead.
[Analyst]: Hello, management. Thank you for
Operator: Sarah, are you there? We are taking the next question from the line of Rahaf Alhussain. Rahaf, you are unmuted. Please go ahead.
Rahaf Alhussain: I just wanted to understand, from you, what is the optimal level for private labels? You have done a great job reaching 19% of total sales, but what is the optimal level that you want to achieve?
Dr. Hossam Khattab: The optimal level, which is the global benchmark, usually between 25% to 30%, is the optimal level for private label contribution across business.
Rahaf Alhussain: This is your target, right?
Dr. Hossam Khattab: Yes. This is what we are working towards. We do not know when we will reach it, but yes, definitely, this is the ideal scenario that we reach.
Rahaf Alhussain: Great. Thank you.
Operator: Thank you, management, for the insightful presentation and for taking the time to answer all the questions. With no further questions, and as we are nearing the end of our call, I would give it back to Nahdi's management to give their concluding remarks.
Mohammed Al-Khubani: I just wanted to check one more time. Is Sarah still on the line? She wants to ask a question. Could you please check with her? I would love to answer all questions before we conclude.
Operator: Okay, let me double-check. Sarah, you are unmuted. Could you try now?
[Analyst]: Hi. Can you hear me now? Hello.
Operator: Yes, we can.
[Analyst]: Could you please provide any updates on receivable in Q3, and whether the increase observed in H1 2026 was primarily driven by Wasfaty or longer collection cycles?
Mohammed Al-Khubani: Thank you for the question. We have a very solid credit policy. The overall business has been always cash, and we have been gradually, for the past probably 10 years, growing the credit business. Now, definitely with the clinic, we are entering the healthcare business, the credit business grew. And definitely with adding another government payer to the overall credit receivable, by design, it will continue to grow. From an overall collection and credit policy, we have a very strong policy. And I think we are on track. Our bad debt when it comes to ECL provision and bad debt, it is very minimal, and we continue to track it and monitor it. I think we have a very robust process. The balance for receivable will continue to grow, but that is in line with the business growth, and currently, we do not see any risk.
[Analyst]: Thank you for answering my question.
Mohammed Al-Khubani: Thank you.
Operator: Thank you. Management, I would give it to you if you have any concluding remarks.
Mohammed Al-Khubani: Well, I think I would really like to thank SNB Capital for managing this session, very high quality, very professional. I would like to thank our investors for sharing with us their questions. By the way, those questions, as I always say, they help us to rethink, reflect, and improve with a growth mindset. I always urge you to help us because we, as humans, have blind spots all the time trying to figure out what's right, what's wrong, using our facts and judgment. Your questions mean a lot to us, and I promise you that we review them when you send them to the IR team regularly and get guidance and enlightenment from them. This is not a normal time. This is a woke time, as I said. We will work together. We are not superheroes.
Mohammed Al-Khubani: We are just normal people who are trying to get their best out there to serve the long-term interests of everyone. I just wanted to emphasize one more time that your questions, your thoughts, your ideas are very valuable for us. I know that a lot of people think we do that for governance, but trust me, we do that for learning. Please be generous with us and share with us whenever you have thoughts or questions. Thank you very much, and Inshallah, we will see you in the next quarter's review.
Mohammed Al-Khubani: Thank you.
Operator: SNB Capital would like to thank Nahdi's management for taking the time to conduct this call. We would like to also thank all participants for attending. We wish you a pleasant day. Thank you. You may now disconnect.
Mohammed Al-Khubani: Bye-bye.
