Advanced Petrochemical Company (Advanced) announced that its BoD has proposed a cash dividend of SAR0.75/share for 2Q2016, in line with our forecast.  The annualised dividend implies a payout ratio of 84% based on our 2016 earnings estimate, and an annualised dividend yield of 6.0%. According to the announcement, the ex-dividend date will be 1 July 2016, while the distribution date is yet to be set. The BoD also proposed increasing the share capital of the company by 20% from SAR1.64bn to SAR1.97bn via the distribution of one bonus share for every  five shares owned. This will increase the number of issued shares to 196.794 million from 163.995 million shares. According to the announcement, the purpose of the proposed capital increase is to bring the company’s share capital more in line with their asset base and to help support future investment plans.   We remain Neutral on Advanced at the current valuation levels and still expect pressure on PP spreads in 2H16, but continue to like the stock as a defensive play, given its attractive yield, solid balance sheet and strong management. The bonus shares are subject to shareholder approval, and the ex-date for the bonus issue will be the day following the extraordinary general meeting (EGM), the date of which has not yet been determined by the company. (Company disclosure, Yousef Husseini)   Advanced: SAR49.83 as of 17 May 2016, Rating: Neutral, FV: SAR47.00 per share, MCap: USD2,179 million, APPC AB / 2330.SE