Table 29: Stocks mentioned Name Symbol Opinion Q-R-Q Price PO Al Hammadi XBQYF Buy C-1-7 SAR 40.19 SAR 64.0 Al Othaim XWPJF Buy C-1-7 SAR 99.99 SAR 121.0 BAE SYSTEMS BAESF Buy A-1-7 GBP 483.4 GBP 600 BAE SYSTEMS BAESY Buy A-1-7 USD 26.17 GBP 34.26 SABIC XAUBF Buy C-1-8 SAR 80.87 SAR 99.5 Saudi Telecom XUTUF Buy C-1-7 SAR 63.95 SAR 81.0 Savola XSAVF Buy C-1-7 SAR 35.95 SAR 46.0 THALES THLEF Buy C-1-7 EUR 73.5 EUR 87.0 YANSAB XUYNF Buy C-1-7 SAR 40.28 SAR 48.0 Zain KSA XOCTF Buy C-1-9 SAR 7.83 SAR 12.2 Almarai XALRF Neutral B-2-7 SAR 53.7 SAR 61.0 Jarir XJRIF Neutral C-2-7 SAR 118.64 SAR 134.0 SAFCO XDUAF Neutral C-2-8 SAR 59.73 SAR 72.0 Dallah Healthcare XJEFF Underperform C-3-7 SAR 86.12 SAR 79,0 Dar Al Arkan XARKF Underperform C-3-9 SAR 6.49 SAR 7.0 Extra XYDUF Underperform C-3-7 SAR 26.72 SAR 24.0 Source: BofA Merrill Lynch Global Research Price objective basis & risk Al Hammadi (XBQYF) Our SAR64 PO for Al Hammadi is based on our DCF-derived valuation. This is equivalent to 32x FY17E EPS. Strong earnings growth means out-year valuations appear much more reasonable than near-term valuations (e.g. implied 13x FY20E EPS). Company specific risks are: lower-than-expected growth resulting from delays in executing on expansion plans, inability to raise prices to offset cost inflation, failure to manage growth without impacting margins, pricing pressure from insurers, new competition, sustained delays to government payments, and any potentially dilutive acquisitions. General/macro risks are: sustained low oil prices and any resultant slow-down in the economy, civil unrest, ongoing failure of the government to pay bills. Al Othaim (XWPJF) We use a combination of DCF, DDM and peer group analysis to value Al Othaim. We have taken a weighted average of values implied by our DCF, DDM and peer group analyses. We attribute a 50% weight to the DCF and 25% weights for both the DDM and the P/E multiple, which points to a PO of SAR121. We attribute a greater weight to the DCF valuat