Revenue – SAR201.1mn,-47.8% Y-o-Y, -1.9% Q-o-Q, -18.0% vs. EFGe Gross loss – SAR6.8mn, vs. gross profit of SAR14.5mn in 4Q15, SAR35.5mn in gross loss in 3Q16 Net loss – SAR32.1mn, vs. net loss of SAR1.0mn in 4Q15, SAR47.8mn in 3Q16, EFGe net loss: SAR42.8mn     Al-Khodari reported another weak set of results for 4Q16, the main highlights of which are: i) negligible awards of SAR66mn; ii) record low backlog of SAR2.9bn; iii) record low revenue of SAR201mn; and iv) heavy net losses of SAR32mn, a product of weak inflow of new awards since 2Q15, recent project cancellations and upward cost revisions, as well as low project execution. We await the release of the full statements to assess the quarter’s balance sheet and cash flow developments.   Main negatives: Weak awards for the quarter (SAR65.5mn, EFGe: SAR32mn). This compares to SAR12mn in 4Q15, SAR78mn in 3Q16, bringing the total awards  in 2016 to SAR214mn (2015: SAR1.5bn, mostly secured in 1Q15; 2013-14 average: SAR2.8bn) Backlog shrank for the eighth consecutive quarter, on weak new awards, reaching SAR2.9bn (December 2015: SAR3.9bn, September 2016: SAR3.0bn)   Another record low quarterly revenue; at SAR201mn (-47.8% Y-o-Y, -1.9% Q-o-Q, -18.0% vs. EFGe). Management attributed the weakness to slow progress on the ongoing projects and low contribution from newly awarded contracts. 2016 revenue totalled SAR1.0bn (-34.4% Y-o-Y) Heavy net loss of SAR32.1mn (4Q15: SAR1.0mn, 3Q16: SAR47.8mn, both in net loss, EFGe: SAR42.8mn). This brings 2016 net loss to SAR119.1mn (2015: SAR33.5mn in net profit)   Main positive: S,G&A costs controlled (-28.8% Y-o-Y, +9.8% Q-o-Q), due to the reduction in overheads and manpower costs   Al-Khodari’s pure exposure to Saudi Arabia and to the government/semi-government entities offers little buffer in face of the increasingly challenging market in Saudi Arabia. The Saudi construction sector has continued to be difficult with slow bidding, high project cancellation, weak project execution, tightening liquidity and rising financing costs, continuing to be the main themes for the sector in Saudi Arabia. We reiterate our concerns over the company’s i) inability to secure significant contract awards since 2Q15; ii) high leverage (net debt-to-equity at 1.0x in September 2016); and iii) rising unbilled receivables balance (131% to 9M16 annualised revenue, 200% to total receivables). (Company disclosure, Mai Attia, Sara Boutros)   Abdullah A. M. Al-Khodari Sons Company: SAR12.29 as of 18 January 2017, Rating: Sell, TP: SAR6.55 per share, MCap: USD183mn, ALKHODAR AB / 1330.SE