Jul-1 5 Aug -15 Sep -15 Oct-1 5 Nov-15 Dec-15 Jan-16 Feb-16 Ma r-16 Apr-1 6 Ma y-16 Jun-16 Jarir Marketing Company Rating/PT Change Equities Consumer Discretionary Saudi Arabia Cutting estimates on lower-than-expected Q2 2016 results, yet Buy/Moderate Risk maintained Q2 2016 earnings dropped 17% YoY, missing estimates for the second quarter in a row. Revenues in line, while margins fall on higher opex and change in product mix. New MTRe: Cutting margins estimates and maintaining top-line estimates. Using a higher cost of equity, we cut our PT by 27% to SAR139.5 (ETR: +18%), yet we maintain our Buy/Moderate Risk. Earnings miss estimates on lower-than-expected margins: Jarir Marketing Company (4190.TDWL) released its preliminary financial results for Q2 2016, reporting a 17% YoY drop in net earnings of SAR128.5mn. For the second consecutive quarter, net earnings fall beyond MTRe and consensus estimates (-21% vs. MTRe; -17% vs. consensus). The earnings drop was mainly attributed to lower-thanexpected EBIT margin of 8.3% (vs. MTRe of 11.1%; consensus of 11.0%). The company attributed the lower margins to change in sales mix and higher operating expenses. We note that electronics sales have lower margins as compared to stationery products. Meanwhile, total revenues came almost in line with estimates (-1% vs. MTRe; -3% vs. consensus), showing a 1% YoY decline to SAR1.4bn due to the decrease in computers and computer supplies sales in addition to the decrease in office supplies to corporate and wholesale segments. New showroom was opened as expected, while total area came above our estimates: Jarir has recently opened a new showroom in Riyadh with a total area of 4,188 sqm and an investment cost of SAR21mn. This is the second showroom that is opened since the beginning of 2016, raising the total number of showrooms to 42 (36 in Saudi Arabia and 6 in GCC countries). The company is targeting to open 6 new showrooms in 2016, while we expect only 4 new showrooms to be opened in 2016 (3 in Saudi Arabia and 1 in GCC). However, the new showroom area came above our expected average area of new showrooms in 2016 by +13%. Cutting PT by 27% to SAR139.5 (ETR: +18%), yet Buy/Moderate Risk maintained: Overall, the results missed MTRe and consensus for the second consecutive quarter, mainly due to lower-thanexpected margins. Accordingly, we downgrade our estimated 2016e EBITDA margin by 3.3 percentage points to 10.4% compared to our previously estimated margin of 13.7%. We now expect that EBITDA will grow at a 5-year CAGR of 3.5% vs. our previous estimated CAGR of of 9.0%. Meanwhile, we maintain our top-line estimates. As per our valuation assumptions, we used a higher Cost of Equity (COE) of 10.4% vs. 8.7% in our previous update, mainly due to higher inflation differential between KSA and USA of 3.0% (vs. 0.9% in previous update). Hence, we cut our price target (PT) by 27% from SAR191.6/share to SAR139.5/share, implying an expected total return (ETR) of +18%; thus, we maintain our Buy/Moderate Risk rating. We maintain our positive view on Jarir's future growth, based on the following key drivers: Showrooms spread across Saudi Arabia and GCC markets with ambitious expansion plans. Favorable demographics of Saudi Arabia in terms of population and high purchasing power. Strong demand for smartphones and laptops due to the continuous growth of internet usage. Continuous development and upgrade of technologies and electronic products. Diversification of electronic and educational products. Buy Moderate Risk Stock Performance & Details JARIR (SAR) vs. SASEIDX Rebased 25 0.00 20 0.00 15 0.00 10 0.00 50.00 0.0 0 Volume (RHS) JARIR SASEIDX Rebased mn 0. 90 0. 80 0. 70 0. 60 0. 50 0. 40 0. 30 0. 20 0. 10 - Source: Company reports, MubasherTrade Research estimates Stock Details PT: SAR139.5 ETR: +18% Last price (SAR) 118.0 52-W High (SAR) 227.3 52-W Low (SAR) 110.0 6M -ADVT (SARmn) 15.2 % Chg: M om -2.0 % Chg: YoY -47.3 % Chg: YTD -26.2 Mubasher Ticker Bloomberg Ticker Capital Details 4190.TDWL JARIR AB No. of Shares (mn) 90.0 Mkt Cap (SARmn) 10,620.0 Mkt. Cap (USDmn) 2,831.7 Free Float (%) 50.9% Summary KPIs (SAR mn) 2013a 2014a 2015a 2016e 2017e 2018e Total revenues 5,243 5,699 6,375 6,248 6,978 7,715 EBITDA 669 758 839 653 727 809 EBITDA margin 12.8% 13.3% 13.2% 10.4% 10.4% 10.5% Net Profit After Zakat 653 745 828 643 715 796 Net profit margin 12.5% 13.1% 13.0% 10.3% 10.2% 10.3% EPS 7.26 8.28 9.21 7.14 7.95 8.84 DPS 5.80 6.65 7.71 5.71 6.36 7.07 BVPS 13.03 15.11 16.71 18.13 19.72 21.49 PER (x) 20.1x 21.2x 17.1x 16.5x 14.8x 13.3x PBV (x) 11.2x 11.6x 9.4x 6.5x 6.0x 5.5x EV/EBITDA (x) 19.9x 20.9x 16.8x 16.5x 14.8x 13.3x Dividend Yield 4.0% 3.8% 4.9% 4.8% 5.4% 6.0% Net Debt (Cash)-to-Equity 15.2% 0.7% -4.8% 7.4% 7.9% 7.5% Net Debt (Cash)-to-EBITDA 0.27x 0.01x -0.09x 0.19x 0.19x 0.18x Mohamed Hamdy Manager, Equity Analysis Mubasher International Mohamed.Hamdy@MubasherFS.com Page 1

Valuation Updating our two valuation models (DCF and multiples), we reached a 27% lower weighted-average one-year price target (PT) of SAR139.5/share, including estimated interim DPS of SAR2.5 to be distributed in H2 2016. Thus, we maintain our Buy/Moderate Risk. This reflects an ETR of +18%. We have assigned 70%/30% weights on the DCF and the multiples valuation, respectively. DCF SAR158.6/share (downgraded by 33%): We discount Jarir's Free Cash Flow to the Firm (FCFF), using a Cost of equity (COE) of 10.4% based on the following assumptions: US 10-year Treasury yield of 1.4%. Inflation differential (between KSA and USA) of 3.0%. Valuation Models DCF Valuation Source: MubasherTrade Research estimates Page 2 Adjusted 5-year monthly beta of 0.64. US Equity Risk Premium (ERP) of 6.3%, KSA Country Risk Premium of 2.0% as implied by its Credit Default Spread of 1.7%, levered up by 30% to account for inherent volatility in equity returns. The weighted average cost of capital (WACC) is 10.3% on average over our forecast period (2016e-2022e). Terminal WACC and terminal growth rate of 10.4% and 3.0%, respectively. Multiples SAR86.3/share (downgraded by 25%): We used MENA peers forward PER and EV/EBITDA of 11.7x and 10.0x, respectively. All figures in SAR mn except per share figures Valuation weights Sum of PV of FCFF (2017-2022) 22.9% 3,272 PV of Terminal Value 77.5% 11,064 Enterprise Value 100.4% 14,336 Investments 0.4% 61 Less: (Net debt) / Plus: Net cash -0.8% (121) Equity value 100.0% 14,276 No. of shares 90.0 Long-term fair value 70.0% 158.6 Multiples Valuation MENA Forward EV/EBITDA 10.0x Target equity value 7,153 Implied Fair Value 79.5 MENA Forward PER 11.7x EPS 2017 7.9 Implied Fair Value 93.1 Average Multiple Valuation 30.0% 86.3 Estimated interim DPS in 2016 2.5 Weighted Average Price Target 139.5 Quarterly performance SAR bn 2.0 1.8 1.6 1.40 1.4 1.2 14.3% 1.0 0.8 0.6 0.4 0.2 - Q1 2014a Change in estimates SAR mn 2016 2017 2018 2019 2020 5-year CAGR EBITDA Old 858 954 1,058 1,165 1,288 9.0% New 653 727 809 894 994 3.5% Change -24% -24% -24% -23% -23% -5.5% SAR mn 2016 2017 2018 2019 2020 Average EBITDA Margin Old 13.7% 13.7% 13.7% 13.7% 13.8% 13.7% New 10.4% 10.4% 10.5% 10.5% 10.6% 10.5% Change -3.3% -3.3% -3.2% -3.2% -3.1% -3.2% SAR mn 2016 2017 2018 2019 2020 5-year CAGR Net earnings 1.29 10.3% Q2 2014a 1.43 14.1% Q3 2014a 1.58 1.91 12.2% 12.7% Q4 2014a Q1 2015a 1.41 10.8% Q2 2015a 1.54 1.52 14.1% Q3 2015a 13.0% Q4 2015a 1.42 1.39 11.5% Q1 2016a Old 843 938 1,042 1,148 1,268 8.9% New 643 715 796 879 976 3.3% Change -24% -24% -24% -23% -23% -5.6% 8.3% Q2 2016a Revenues Operating Profit (EBIT) EBIT Margin % 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0%

Valuation (Cont. d) 2014a 2015a 2016e 2017e 2018e 2019e 2020e 2021e 2022e KFIs All figures in SAR mn Total revenues 5,699 6,375 6,248 6,978 7,715 8,483 9,358 10,316 11,284 % change - YoY 8.7% 11.9% -2.0% 11.7% 10.6% 10.0% 10.3% 10.2% 9.4% EBITDA 758 839 653 727 809 894 994 1,105 1,217 EBITDA margin 13.3% 13.2% 10.4% 10.4% 10.5% 10.5% 10.6% 10.7% 10.8% EBIT 727 809 617 687 765 846 940 1,044 1,149 EBIT Margin 12.8% 12.7% 9.9% 9.9% 9.9% 10.0% 10.0% 10.1% 10.2% Net Income Before Zakat 766 852 659 734 816 901 1,001 1,111 1,226 Zakat (20) (23) (16) (18) (20) (23) (25) (28) (31) Net Income After Zakat 745 828 643 715 796 879 976 1,083 1,195 Discount rate & PV of Fair Value FCFF Calculation FCFF EBIT 727 809 617 687 765 846 940 1,044 1,149 Zakat on EBIT (18) (20) (15) (17) - (21) (23) (26) (29) Depreciation 31 30 36 40 43 49 55 61 68 Capex (85) (143) (153) (160) (168) (215) (266) (279) (292) Change in Working Capital (21) 69 (48) (42) (39) (59) (67) (74) (74) FCFF 634 745 437 508 583 599 638 727 822 Terminal value (end of 2022) 14,560 Adjusted 5-Yr Beta 0.64 Equity weight 99.0% 98.9% 98.7% 98.4% 98.1% 97.7% 100.0% Country Risk Premium 2.0% Debt weight 1.0% 1.1% 1.3% 1.6% 1.9% 2.3% 0.0% Cost of Equity (CoE) 10.4% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Cost of Debt (CoD) 3.2% CoD 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% Terminal Growth Rate 3.0% WACC 10.3% 10.3% 10.3% 10.2% 10.2% 10.2% 10.4% Terminal WACC 10.4% PV of FCFF 485 532 522 531 578 625 All figures in SAR mn except per share figures Sum of PV of FCFF (2017-2022) 3,272 PV of Terminal Value 11,064 Cost of equity Enterprise Value 14,336 8.3% 9.3% 10.4% 11.4% 12.4% Investments 61 2.0% 190.9 165.1 145.6 130.4 118.2 Less: (Net debt) / Plus: Net cash (121) 2.5% 202.9 173.4 151.7 135.0 121.8 Equity value 14,276 3.0% 217.2 183.1 158.6 140.1 125.7 No. of shares 90.0 3.5% 234.4 194.5 166.5 145.9 130.0 Long-term fair value 158.6 4.0% 255.7 207.9 175.6 152.4 134.8 Growth Source: Company reports, MubasherTrade Research estimates Page 3

Comparable Valuation Mkt cap EBITDA Margin PER EV/EBITDA Dividend Yield (USD mn) Country Company name 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 Egypt Oriental Weavers 395 12.7% 10.7% 15.5% 13.9% 14.8x 9.8x 5.5x 5.0x 9.5x 6.6x 3.6x 3.6x 0.7% 6.3% 11.1% 12.3% Egypt GB Auto 314 8.8% 5.9% 8.2% 8.5% 22.5x 10.4x 7.0x 5.7x 6.5x 9.6x 7.4x 6.4x 0.0% 0.0% 4.0% 7.7% Qatar Al Meera 1,203 7.9% 7.3% 9.3% 9.4% 17.7x 27.7x 17.5x 15.2x 19.2x 17.1x 13.9x 11.9x 4.5% 4.1% 4.8% 5.2% Saudi Arabia extra 255 4.6% 2.5% 2.7% 3.2% 19.9x 29.2x 14.7x 13.4x 14.1x 13.8x 10.0x 8.2x n/a n/a 4.0% 4.4% Saudi Arabia Shaker 403 7.8% n/a 10.4% 10.7% 5.7x 13.1x 7.5x 6.4x 22.1x 23.6x 11.6x 10.4x 4.2% 0.0% 6.7% 7.0% Saudi Arabia Al Othaim 1,035 5.8% 17.5% 5.3% 5.3% 22.1x 17.3x 17.8x 15.3x 15.7x 12.9x 13.4x 11.8x 1.7% 2.2% 2.0% 2.4% Saudi Arabia Al Hokair 2,424 17.3% n/a 16.2% 16.1% 24.5x 25.3x 12.0x 12.7x 21.3x 20.5x 10.4x 10.3x 1.5% 2.3% 5.2% 4.0% MENA Average 861 9.3% 8.8% 9.7% 9.6% 18.2x 19.0x 11.7x 10.5x 15.5x 14.9x 10.0x 8.9x 2.1% 2.5% 5.4% 6.1% MENA Median 403 7.9% 7.3% 9.3% 9.4% 19.9x 17.3x 12.0x 12.7x 15.7x 13.8x 10.4x 10.3x 1.6% 2.3% 4.8% 5.2% Britain Booker Group 4,159 3.1% 3.1% 3.5% 3.7% 27.5x 21.9x 23.9x 21.2x 19.0x 15.1x 16.3x 14.4x 1.9% 2.5% 3.0% 3.4% China Intime Retail Group 1,821 36.2% n/a 31.0% 30.9% 8.5x 10.7x 13.4x 12.2x 7.8x 9.4x 11.1x 10.4x 5.0% 3.4% 4.2% 4.4% Luxembourg B&M European Value Retail 3,846 8.3% n/a 9.8% 9.7% n/a 78.4x 21.1x 17.9x n/a 22.7x 14.8x 12.7x n/a 1.1% 1.8% 2.2% United States Office Depot 2,866 0.2% 12.0% 5.0% 5.3% NM 13.5x 7.6x 7.2x NM 6.6x 2.2x 2.2x 0.0% 0.0% 0.0% 0.0% United States Best Buy 10,832 4.4% 23.3% 5.4% 5.7% 11.2x 13.5x 11.9x 10.9x 3.7x 4.8x 4.0x 3.8x 2.9% 2.0% 3.8% 4.1% United States Dollar Tree 19,009 14.8% 52.5% 10.6% 11.1% 18.6x 22.7x 34.9x 25.0x 9.5x 11.6x 17.4x 12.3x 0.0% 0.0% 0.0% 0.0% Developed Average 7,089 11.2% 22.7% 10.9% 11.1% 16.4x 26.8x 18.8x 15.7x 10.0x 11.7x 11.0x 9.3x 2.0% 1.5% 2.1% 2.3% Developed Median 4,002 6.4% 17.7% 7.6% 7.7% 14.9x 17.7x 17.3x 15.0x 8.7x 10.5x 12.9x 11.3x 1.9% 1.6% 2.4% 2.8% Global Average 3,736 10.1% 15.0% 10.2% 10.3% 17.5x 22.6x 15.0x 12.9x 13.5x 13.4x 10.5x 9.1x 2.0% 2.0% 3.9% 4.4% Global Median 1,821 7.9% 10.7% 9.3% 9.4% 18.6x 17.3x 13.4x 12.7x 14.1x 12.9x 11.1x 10.4x 1.7% 2.1% 4.0% 4.1% Jarir @ Market Price 2,832 13.3% 13.2% 10.4% 10.4% 21.2x 17.1x 16.5x 14.8x 20.9x 16.8x 16.5x 14.8x 3.8% 4.9% 4.8% 5.4% Jarir @ MTRe fair value 3,346 16.8x 15.1x 19.5x 17.5x 16.6x 14.9x 19.2x 17.3x 4.8% 5.5% 4.1% 4.6% Better than regional peers' average Source: Bloomberg, MubasherTrade Research estimates Page 4

Comparable Valuation (Cont. d) PER 2016 vs. Global Median Oriental Weavers 5.5x 13.4x GB Auto 7.0x Shaker 7.5x Office Depot 7.6x Best Buy 11.9x Al Hokair 12.0x Intime Retail Group 13.4x extra 14.7x Jarir 16.5x Al Meera 17.5x Al Othaim 17.8x B&M European Value Retail 21.1x Booker Group 23.9x Dollar Tree 34.9x EV/EBITDA 2016 vs. Global Median Office Depot 2.2x 11.1x Oriental Weavers 3.6x Best Buy 4.0x GB Auto 7.4x extra 10.0x Al Hokair 10.4x Intime Retail Group 11.1x Shaker 11.6x Al Othaim 13.4x Al Meera 13.9x B&M European Value Retail 14.8x Jarir 16.5x Booker Group 16.3x Dollar Tree 17.4x EBITDA margin 2016 vs. Global Median Dividend yield 2016 vs. Global Median Intime Retail Group 31.0% Oriental Weavers 11.1% Al Hokair Oriental Weavers Dollar Tree Jarir Shaker B&M European Value Retail Al Meera 16.2% 15.5% 10.6% 10.4% 10.4% 9.8% 9.3% Shaker Al Hokair Jarir Al Meera Intime Retail Group extra 6.7% 5.2% 4.8% 4.8% 4.2% 4.0% GB Auto 8.2% Best Buy 5.4% Al Othaim 5.3% Office Depot 5.0% Booker Group 3.5% extra 2.7% Source: Bloomberg, MubasherTrade Research estimates 9.3% GB Auto Best Buy Booker Group Al Othaim B&M European Value Retail 4.0% 3.8% 3.0% 2.0% 1.8% 4.0% Page 5

Financial Summary Balance Sheet (SAR mn) Per-Share Data FY End: December 2013a 2014a 2015a 2016e 2017e 2018e FY End: December 2013a 2014a 2015a 2016e 2017e 2018e Total cash & short-term investments 86 128 110 108 110 143 Price 145.8 176.0 157.4 118.0 118.0 118.0 Accounts receivable, net 137 141 153 152 170 188 # Shares (mn) 90.0 90.0 90.0 90.0 90.0 90.0 Inventories 771 817 793 864 946 1,025 EPS 7.26 8.28 9.21 7.14 7.95 8.84 Other current assets 180 197 164 194 217 240 DPS 5.80 6.65 7.71 5.71 6.36 7.07 Total current assets 1,174 1,282 1,219 1,318 1,442 1,595 BVPS 13.03 15.11 16.71 18.13 19.72 21.49 Net property, plant and equipment 994 1,019 1,131 1,248 1,369 1,494 Equity and other investments 33 63 61 61 61 61 Valuation Indicators Total assets 2,201 2,364 2,411 2,627 2,872 3,150 FY End: December 2013a 2014a 2015a 2016e 2017e 2018e CPLTD 125 100 25 12 - - Short-term debt - - - 100 120 144 PER (x) 20.1x 21.2x 17.1x 16.5x 14.8x 13.3x Trade accounts payable 527 613 584 643 717 792 PBV (x) 11.2x 11.6x 9.4x 6.5x 6.0x 5.5x Other current liabilities 130 133 167 169 189 208 EV/Sales (x) 2.5x 2.8x 2.2x 1.7x 1.5x 1.4x Total current liabilities 783 846 776 924 1,025 1,144 EV/EBITDA (x) 19.9x 20.9x 16.8x 16.5x 14.8x 13.3x Long-term debt 138 38 12 - - - Dividend Payout Ratio 79.9% 80.3% 83.8% 80.0% 80.0% 80.0% Provisions 56 63 71 71 71 71 Dividend Yield 4.0% 3.8% 4.9% 4.8% 5.4% 6.0% Other non-current liabilities 51 57 48 - - - Total long term liabilities 245 158 131 71 71 71 Profitability & Growth Ratios Paid in capital 900 900 900 900 900 900 FY End: December 2013a 2014a 2015a 2016e 2017e 2018e Legal Reserves 65 140 223 287 358 438 Retained Earnings 207 320 381 445 517 596 Revenue Growth 13.1% 8.7% 11.9% -2.0% 11.7% 10.6% Shareholders' equity 1,173 1,360 1,504 1,632 1,775 1,934 EBITDA Growth 14.6% 13.3% 10.7% -22.2% 11.4% 11.2% Total liabilities & Shareholder's equity 2,201 2,364 2,411 2,627 2,872 3,150 EPS Growth 14.6% 14.1% 11.1% -22.4% 11.3% 11.3% EBITDA Margin 12.8% 13.3% 13.2% 10.4% 10.4% 10.5% Income Statement (SAR mn) Net Profit Margin 12.5% 13.1% 13.0% 10.3% 10.2% 10.3% FY End: December 2013a 2014a 2015a 2016e 2017e 2018e ROAE 59.4% 58.9% 57.9% 41.0% 42.0% 42.9% Total revenues 5,243 5,699 6,375 6,248 6,978 7,715 ROAA 31.2% 32.7% 34.7% 25.5% 26.0% 26.4% Cost of revenues (4,430) (4,785) (5,375) (5,430) (6,060) (6,694) Gross profit 812 914 1,001 818 919 1,021 Liquidity & Solvency Multiples Operating expenses (143) (156) (162) (165) (192) (212) FY End: December 2013a 2014a 2015a 2016e 2017e 2018e EBITDA 669 758 839 653 727 809 Depreciation (21) (31) (30) (36) (40) (43) Net Debt/(Cash) 177.8 10.1 (71.9) 121.2 140.8 145.1 EBIT 648 727 809 617 687 765 Net Debt (Cash)-to-Equity 15.2% 0.7% -4.8% 7.4% 7.9% 7.5% Net interest income/(expense) (7) (5) (2) (2) (4) (4) Net Debt (Cash)-to-EBITDA 0.3x 0.0x -0.1x 0.2x 0.2x 0.2x Other non-operating income/(expens 33 44 46 45 50 55 Debt-to-Assets 12.0% 5.8% 1.6% 4.3% 4.2% 4.6% Net Profit before zakat 674 766 852 659 734 816 Current Ratio 1.5x 1.5x 1.6x 1.4x 1.4x 1.4x Zakat (21) (20) (23) (16) (18) (20) Net Profit after zakat 653 745 828 643 715 796 Consensus Estimates FY End: December 2016e 2017e 2018e Cash Flow Statement (SAR mn) FY End: December 2013a 2014a 2015a 2016e 2017e 2018e Revenues 6,414 6,813 7,678 MubasherTrade Research vs. Consensus -2.6% 2.4% 0.5% Net Cash From Operating Activities 634 730 883 541 667 750 Net Income 812 866 983 Net Cash used in Investing Activities (200) (85) (141) (153) (160) (168) MubasherTrade Research vs. Consensus -20.9% -17.4% -19.1% Net Cash used in Financing Activities (434) (645) (742) (397) (518) (562) Net Change in Excess Cash - - - (9) (12) 20 PER (x), MTR Price Target 19.5x 17.5x 15.8x PBV (x), MTR Price Target 7.7x 7.1x 6.5x CAPEX (201) (55) (143) (153) (160) (168) EV/EBITDA (x), MTR Price Target 19.2x 17.3x 15.5x Source: Company data, MubasherTrade Research estimates a = Actual; e = Estimate Share price at 13-Jul-16 Page 6

Disclosure Appendix Important Disclosures METHODOLOGY: We strive to search for the best businesses that trade at the lowest valuation levels as measured by an issuer s intrinsic value on a per-share basis. In doing so, we follow both topdown and bottom-up approaches. Under the top-down approach, we attempt to study the most important quantitative and qualitative factors that we believe can affect a security's value, including macroeconomic, sector-specific, and company-specific factors. Under the bottom-up approach, we focus on the analysis of individual stocks by running our proprietary scoring model, including valuation, financial performance, sentiment, trading, risk, and value creation. COUNTRY MACRO RATINGS: We analyze the four main sectors of a country s macroeconomics, then we assign,, and star for low risk, moderate risk, and high risk, respectively. We use different weights for each economic sector: (a) Real Sector (30% weight), (b) Monetary Sector (10% weight), (c) Fiscal Sector (25% weight), (d) External Sector (15% weight), and (e) Credit Rating and Outlook (20%). STOCK MARKET RATINGS: We compare our year-end price targets for the subject market index on a total-return basis versus our calculated required rate of return (RRR). Taking into account our Country Macro Rating, we set the Neutral borderline (below which is Underweight ) as 20% of RRR for Country Macro Rating, 40% of RRR for Country Macro Rating, and 60% of RRR for Country Macro Rating. That said, our index price targets are based on the average of two models. Model (1): Estimated index levels based on consensus price targets of all index constituents. Stocks with no price targets are valued at market price. Model (2): Estimated index levels based on our expected re-pricing (whether re-rating, de-rating, or unchanged rating) of the forward price-earnings ratio (PER) of each index in addition to consensus earnings growth for the forward year. SECTOR RATINGS: On the sectors level, we focus on six major sectors, namely (1) Consumer and Health Care, (2) Financials, (3) Industrials, Energy, & Utilities, (4) Materials, (5) Real Estate, and (6) Telecom Services & IT. To assess each sector, we use the SWOT analysis to list the strengths, weaknesses, opportunities, and threats in each country. We then translate our qualitative SWOT analysis into a quantitative model to evaluate all six sectors across countries. Each of the measures we used, although mostly subjective, is assigned a score as either +1 (high impact), 0 (medium impact), or -1 (low impact). At a later stage, when assigning the final rating Overweight, Neutral, or Underweight for each sector in each country, we realize that sometimes it is unfair to assign equal weights for the sub-sectors in each major sector assessed. Hence, some of the sub-sectors are given different weights for their significant profile in each country. Additionally, the final rating for each sector in each specific country is assigned based on a relative calculation comparing this sector to all other sectors in this country. SECURITY INVESTMENT RATINGS: We combine intrinsic value, relative valuation, and market sentiment into a single rating. Our three-pronged methodology involves (1) discounted cash flows DCF valuation model(s), (2) relative valuation metrics, and (3) overall sentiment. Whenever possible we attempt to apply all three aspects on the issuers or securities under review. In certain cases where we do not have our own financial and valuation models, we attempt to scan the market for other analysts value estimates and ratings (i.e. consensus view) on average. We compliment this with relative valuation and sentiment drivers, such as positive/neutral/negative news flows. For all issuers/securities covered, we have three investment ratings (Buy, Hold, or Sell), comparing the security s expected total return (including both price performance and expected cash dividend) over a 12-month period versus its Required Rate of Return RRR as calculated using the Capital Asset Pricing Model CAPM and adjusted for the Risk Rating we attach to each security. Our price targets are subjective and are estimates of the analysts where the securities covered will trade within the next 12 months. Price targets can be derived from earnings-based valuation models (e.g. Discounted Cash Flow DCF ), asset-based valuation models (e.g. Net Asset Value NAV ), relative valuation multiples (e.g. PER, PBV, EV/EBITDA, etc.), or a combination of them. In case we do not have our own valuation model, we use a weighted average of market consensus price targets and ratings. We review the investment ratings periodically or as the situation necessitates. SECURITY RISK RATINGS: We assess the risk profile of each issuer/security covered and assign one of three risk ratings (High, Moderate, or Low). The risk rating is weighted to reflect different aspects specific to (1) the sector, (2) the issuer, (3) the security under review, and (4) volatility versus the market (as measure by beta) and versus the security s average annualized standard deviation. We review the risk ratings at least annually or as the situation necessitates. Other Disclosures MFS does not have any proprietary holding in any securities. Only as a nominee, MFS holds shares on behalf of its clients through Omnibus accounts. MFS is not currently a market maker for any listed securities. Investment Rating If Total Return is Buy (B) Hold (H) Sell (S) Not Rated (NR) Not Covered (NC) Low (1) Moderate (2) High (3) Higher than RRR Higher than RRR Higher than RRR Between RRR and 20% of RRR Lower than 20% of RRR Risk Rating Between RRR and 40% of RRR Lower than 40% of RRR Between RRR and 60% of RRR Lower than 60% of RRR We have decided not to publish a rating on the stock due to certain circumstances related to the company (i.e. special situations). We do not currently cover this stock or we are restricted from coverage for regulatory reasons.

Analyst Certification I (we), Mohamed Hamdy, Equity Analysis - Manager, employed with Mubasher International, a company under the National Technology Group of Saudi Arabia being a shareholder of Mubasher Financial Services BSC (c) and author(s) to this report, hereby certify that all the views expressed in this research report accurately reflect my (our) views about the subject issuer(s) or security(ies). I (we) also certify that no part of my (our) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or view(s) expressed in this report. Also, I (we) certify that neither myself (ourselves) nor any of my (our) close relatives hold or trade into the subject securities. Head of Research Certification I, Amr Hussein Elalfy, Global Head of Research of Mubasher Financial Services BSC (c) confirm that I have vetted the information, and all the views expressed by the Analyst in this research report about the subject issuer(s) or security(ies). I also certify that the author(s) of this report, has (have) not received any compensation directly related to the contents of the Report. Disclaimer This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Mubasher Financial Services BSC (c) ( MFS ) has based this document on information obtained from sources it believes to be reliable but which it has not independently verified; MFS makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. The opinions contained within the document are based upon publicly available information at the time of publication and are subject to change without notice. This document is not intended for all recipients and may not be suitable for all investors. Securities described in this document are not available for sale in all jurisdictions or to certain category of investors. The document is not substitution for independent judgment by any recipient who should evaluate investment risks. Additionally, investors must regard this document as providing stand-alone analysis and should not expect continuing analysis or additional documents relating to the issuers and/or securities mentioned herein. Past performance is not necessarily a guide to future performance. Forward-looking statements are not predictions and may be subject to change without notice. The value of any investment or income may go down as well as up and you may not get back the full amount invested. Where an investment is denominated in a currency other than the local currency of the recipient of the research report, changes in the exchange rates may have an adverse effect on the value, price or income of that investment. In case of investments for which there is no recognized market, it may be difficult for investors to sell their investments or to obtain reliable information about its value or the extent of the risk to which it is exposed. References to ratings/recommendations are for informational purposes only and do not imply that MFS adopts, supports or confirms in any way the ratings/recommendations, opinions or conclusions of the analysts. This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country, or other jurisdiction where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MFS or its affiliates to any registration or licensing requirements within such jurisdiction. MFS accepts no liability for any direct, indirect, or consequential damages or losses incurred by third parties including its clients from any use of this document or its contents. Copyright Copyright 2016, Mubasher Financial Services BSC (MFS), ALL RIGHTS RESERVED. No part or excerpt of this document may be redistributed, reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of MFS. MubasherTrade is a trademark of Mubasher Financial Services BSC. Mubasher Financial Services BSC (c) is an Investment Business Firm Category 1, licensed and regulated by the Central Bank of Bahrain. Issuer of Report Mubasher Financial Services BSC (c) is an Investment Business Firm Category 1, licensed and regulated by the Central Bank of Bahrain. Website: www.mubashertrade.com E-mail: Research@MubasherTrade.com

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