Net income – SAR190.7 million, +10% Y-o-Y, +16% Q-o-Q, +21% versus EFGe Gross profit – SAR228.4 million, +25% Y-o-Y, +12% Q-o-Q, +14% versus EFGe Operating profit – SAR184.0 million, +12% Y-o-Y, +15% Q-o-Q, +22% versus EFGe   Catering reported 4Q2015 KPIs, posting earnings of SAR191 million, up 10% Y-o-Y and 21% ahead of our estimate on solid gross margin gains (we were expecting margin pressure in the quarter). Full-year headline earnings are up 7% Y-o-Y. Revenue growth was weak at 4% Y-o-Y and 7% below our estimate as in-flight catering revenue was flattish (+1% Y-o-Y; c70% of 4Q2015 revenue), likely as the entire peak Hajj season fell in 3Q2015 versus being split between 3Q and 4Q in 2014, as well as a first-ever decline in non-airline revenue (-4%; c9%) on lower sales to the education sector. Business lounge (+50% Y-o-Y; c7% of top-line) and Sky Sales (+19%; c12%) were the main revenue growth drivers on the launch of new airport lounges in late 2014-early 2015 and the opening of retail stores in airports, respectively. Gross margin improved an impressive 6.8pp Y-o-Y to 41.0% (well ahead of our 33.3% estimate) as CoGS fell 7% Y-o-Y on the reversal of cSAR17.6 million in cost of raw materials and goods that were booked in prior quarters, as well as the reversal of some rent and maintenance costs. Accordingly, gross profit was up 25% Y-o-Y and 14% above our estimate. Operating margin was up a tamer c2.3pp Y-o-Y to 33.1% (versus our 25.3% estimate), with operating profit increasing 12% Y-o-Y as G&A costs more than doubled Y-o-Y from a low base deflated by SAR18 million in receivable provision reversals. While we were expecting a pick-up in G&A costs, they were 8% below our estimate; hence, operating profit came in 22% ahead of our forecast.   A decent set of numbers, overall, that highlights that the company was conservative in its costs provisioning in 9M2015. The main red flag is the flattish in-flight catering revenue for the third quarter in a row and the unexpected weakness in non-airline revenue that had been the company's fastest growing segment. (Earnings release, Hatem Alaa, Nada Amin)   Saudi Airlines Catering Company: SAR87.76 as of 19 January 2016, Rating: Buy, FV: SAR150.00 per share, MCap: USD1,919 million, CATERING AB / 6004.SE