Net Income: SAR40.5mn, -56% Y-o-Y, -31% Q-o-Q, -34% vs. EFGe Revenue: SAR1430mn, -2% Y-o-Y, -14% Q-o-Q, 0% vs. EFGe Operating Profit: SAR85mn, -44% Y-o-Y, -16% Q-o-Q, -5% vs. EFGe   Fawaz Al Hokair reported another weak set of results with net income diving 56% Y-o-Y on a drop in revenue and sustained significant margin pressure. Earnings were 34% below our estimate despite a slight operational miss (-5%) likely on higher net interest costs (+39% Y-o-Y) and zakat as well as lower other income. The results set closely mimics the trends seen in 1H16/17. Revenue was flattish (-2% Y-o-Y) and in line with our estimate on weakened consumer demand (LFLs likely remained negative). Gross margin narrowed c5pp Y-o-Y to 21.9% (vs. EFGe of 21.4%) on increased promotions to offload inventory (including prior season’s stock) given weak demand as well as higher inventory provisions (figure not cited). Gross profit fell 21% Y-o-Y and was broadly in line (+2% versus EFGe). EBIT margin dropped slightly less by c4.5pp Y-o-Y to 5.9% (vs. EFGe of 6.2%) as SG&A costs (including depreciation) fell 6% Y-o-Y (+5% vs. EFGe). EBIT was down 44% Y-o-Y and slightly below our number (-5%).   The lackluster results highlights the continued weakness in Saudi’s discretionary spending trends, which may sustain, as well as Al Hokair’s inflated inventory levels. We are Neutral on the stock. (Company disclosure, Hatem Alaa, Nada Amin)   Al Hokair: SAR30.02 as of 19 January 2017, Rating: Neutral, TP: SAR27.00 per share, MCap: USD1,681mn, ALHOKAIR AB / 4240.SE