Net income – SAR188mn, -20% Y-o-Y, +1% Q-o-Q, -21% vs. EFGe Revenue – SAR529mn, -16% Y-o-Y, -3% Q-o-Q, -7% vs. EFGe Gross profit – SAR202mn, -19% Y-o-Y, +0.4% Q-o-Q, -14% vs. EFGe Operating income – SAR193mn, -20% Y-o-Y, +1% Q-o-Q, -13% vs. EFGe   Advanced Petrochemicals (Advanced) just reported its 3Q2016 results, showing a flattish performance Q-o-Q, but earnings were significantly lower than our forecast (-21% vs. EFGe). We had expected earnings to improve significantly this quarter, as Asian PP prices rose 3% Q-o-Q, while propane prices dropped 9%, which should have driven a significant margin improvement for the company. Gross margins did indeed improve by c1.5% to 38.2%, but were short of our 41% expectation. It is not yet clear whether the lower-than-expected margin was driven by higher-than-expected costs or lower-than-expected netbacks. The main disappointment in the results appears to be sales volumes, with revenues falling 3% Q-o-Q - despite better prices - and missing our forecast by 7%, as we had expected higher volumes Q-o-Q, but this did not materialise. Below the operational level, investment income from the South Korean JV came in at SAR14.3mn, below our SAR21mn forecast. The results also included a SAR14mn impairment in available-for-sale investments, which further widened the miss on the bottom-line.   Overall, while the numbers were disappointing, we do not see anything alarming about the results and expect that volumes are likely to bounce back in future quarters. We have a Neutral rating on Advanced, as we think current valuation levels are fair, but still believe the stock is a good defensive play in the current volatile environment, given the company’s strong management track record and attractive yield (c6.6%). (Earnings release, Yousef Husseini)   Advanced: SAR37.96 as of 03 October 2016, Rating: Neutral, FV: SAR39.00 per share, MCap: USD1,992mn, APPC AB / 2330.SE