Elm Company: Scale without sacrificing returns

The business behind the investment case

Elm is involved in many of the transactions that keep Saudi Arabia’s economy moving. Its platforms support identity verification, residency administration, transport and other government and business services. Products such as Muqeem, Yakeen and Tamm are integrated into processes that customers use regularly.

Those relationships are an important part of its competitive position. Elm combines software with access to official systems and experience delivering services at national scale. A new competitor would need more than a good product to replicate that position.

Digital Business generated 71% of group revenue and approximately 86% of gross profit in FY2025. We expect greater use of established products and the addition of new services to support further growth.

Thiqah adds scale, but needs to earn its keep

The SAR 3.39 billion acquisition of Thiqah expanded Elm’s government and commercial relationships. It also added lower-margin activities and acquisition financing. That changes the balance of the group and makes the returns from the deal important to the investment case.

Thiqah was loss-making in 2024 and 2025 on the subsequently restated figures. A small profit in Q2 2026 was encouraging, but stronger cash earnings will be needed to justify the purchase price. Integration savings and better contract economics offer scope for improvement.

Our longer-term forecasts

Our forecasts assume continued growth in the core digital business and better profitability across the enlarged group. We expect revenue to rise from SAR 9.46 billion in FY2025 to SAR 16.76 billion by FY2030.

Source: Elm Company and Evermore Research, 30 October 2026 initiation report. Financial years end 31 December. Figures rounded. Estimates are uncertain and may change.

Cash collection matters as much as earnings

Elm’s relatively modest capital requirements are attractive, but accounting profit does not always turn into cash immediately. H1 2026 operating cash flow was SAR 409 million. Our full-year forecast requires a substantial improvement in collections during the second half.

That is one of the areas we will watch alongside operating margins and Thiqah’s recovery. Sustained cost increases, weaker collections or a slower improvement at Thiqah would weigh on our outlook.

What we think the shares are worth

We initiate coverage with a Buy recommendation and a 12-month target of SAR 640.12. Against the report’s reference price of SAR 561.00 on 29 October 2026, that implies 14.1% capital upside. Our assessment reflects the longer-term earnings and cash flow potential of the core digital business.

This is a dated research view, rather than a live share-price assessment. The full report sets out our discounted cash flow valuation, assumptions, sensitivities and risks.