Reported net profit: SAR35.2mn, -29% Y-o-Y, -19% Q-o-Q, -25% vs. EFGe Revenue: SAR214mn, -6% Y-o-Y, -1% Q-o-Q, -6% vs. EFGe Gross profit: SAR32.4mn, -11% Y-o-Y, -2% Q-o-Q, -18% vs. EFGe Operating profit: SAR9.7mn, -29% Y-o-Y, -19% Q-o-Q, -33% vs. EFGe   Budget Saudi reported a weak set of 4Q16 results, with earnings declining 29% Y-o-Y (25% below our estimate) on weak revenue, margins and lower gains on used car sales (figure not yet disclosed). Full year net profit fell 8% Y-o-Y to SAR174.5mn. Revenue shrunk 6% Y-o-Y, coming in slightly below our forecast (-6% vs. EFGe) as consumers continued to downgrade their vehicle class choices in short-term rentals, preferring smaller and cheaper cars (medium to economy) that led to lower utilisation for the segment. Accordingly, the company had to cut its ST fleet, selling some used vehicles earlier than it typically would for the ST segment; thus, booking lower gains. Gain on sale of used vehicles was also affected by lesser sale of cars from LT fleet, as some clients requested lease period extensions. Gross margin contracted c90bps Y-o-Y to 15.1% (vs. EFGe: 17.3%), which resulted in an 11% Y-o-Y drop in gross profit (-18% vs. EFGe), mainly due to sales mix (lesser contribution from higher margin ST segment) and lower overall utilisation. Operating margin (ex. gain on sale of used vehicles) fell a sharper c150bps Y-o-Y to 4.5% as SG&A costs were flattish (despite falling revenue) mainly due to higher receivable provisions of SAR3.6mn (SAR2.9mn in 4Q15).   The company’s BoD has proposed a cash dividend of SAR1.25/share for FY16, in line with last year’s DPS and our forecast, implying a DPO of 44% and a dividend yield of 4.8%. Ex-dividend date will be the day following the AGM, the date of which is yet to be announced. The BoD has also proposed the distribution of bonus shares (1:6), to be capitalised through retained earnings. This will bring the company’s total number of shares to c711.7mn from 610mn. The ex-dividend date for both distributions is not yet available.   A disappointing results set, as consumer demand for short-term rentals continues to worsen taking its toll on the company’s numbers. We will be revising our numbers to reflect the results. (Company disclosure, Nada Amin, Hatem Alaa)   Budget Saudi: SAR30.94 as of 19 January 2017, Rating: Buy, TP: SAR38.00 per share, MCap: USD503mn, BUDGET AB / 4260.SE