Net income : SAR15.3mn, -54% Y-o-Y, -17% Q-o-Q, -10% vs. EFGe Revenue: SAR869.3mn,+47% Y-o-Y, +2% Q-o-Q, -4% vs. EFGe Gross profit: SAR42.2mn, -35% Y-o-Y, -13% Q-o-Q, -18% vs. EFGe Operating profit: SAR16.5mn, -54% Y-o-Y, -31% Q-o-Q, -27% vs. EFGe   Aldrees reported weak 4Q16 results with headline earnings down 54% Y-o-Y and 10% below estimate as the transport segment remained a drag on performance. The earnings miss would have been more sizable if it weren't for a surprise on some below-the-line items (likely lower zakat charges and higher other income Y-o-Y). FY2016 bottom line was down 37% Y-o-Y.   Revenue was up 47% Y-o-Y (-4% vs. EFGe) driven by the increases in at-the-pump petrol (+50-67%) and diesel (+80%) prices from 2016-start. The transport segment revenue fell Y-o-Y as per the company's disclosure due to lower prices and lesser contracts (especially to the cement and petrochemical sectors).   Gross margin fell c6.1pp Y-o-Y as: i) the government-set absolute petrol station margins were kept flat despite the higher at-the-pump prices; ii) the impact of higher diesel costs in the transport division was not fully passed on (few contracts saw an upward price revision); and iii) the closure of some petrol stations for renovations. Accordingly, gross profit fell 35% Y-o-Y (-18 vs. EFGe). EBIT margin fell a slightly tamer c4.1pp Y-o-Y as SG&A costs were down 12% Y-o-Y (-12% vs. EFGe) with EBIT down 54% (-27% vs. EFGe).   The BoD is proposing a DPS of SAR1 (half last year’s DPS and lower than our SAR1.5 estimate), which implies a DPO of 43% and a dividend yield of 2%. The BoD is also proposing a 1:4 stock dividend increasing share capital to 50mn. Ex-dividend date will be the day after the AGM whose date is yet to be announced.   A weak conclusion to a disappointing year mainly on challenges in the transport division. However, we believe earnings will strongly recover in 2017e as Aldrees benefits from the recently secured, high-margin contract with Maaden (cSAR600mn for four years). We have a Buy rating on the stock. (Hatem Alaa, CFA, Nada S. Amin)   Aldrees: SAR37.28 as of 17 January 2017, Rating: Buy, TP: SAR44.50 per share, MCap: USD398 million, ALDREES AB / 4200.SE