Combined Group Contracting (CGC) has reported its financial results for 1Q2016. Save for a strong revenue figure for the quarter on the back of strong awards in 2015, the quarter was weak, with: i) gross profit margin of 3.3%, with the squeeze coming from ex-Kuwait operations; ii) negative cash flow from operations on pressured working capital; iii) increased debt; and iv) reported net losses, with the pressure mainly coming from the margin pressure.   Main negatives: Weak gross profit margin (GPM) averaging 3.3% (1Q15: 5.9%, 4Q15: 3.7%). The squeeze in margin came on the back of weak ex-Kuwait operations, which reported losses on the gross profit level Negative cash flow from operations, weighed down by pressure in working capital, on payment of suppliers   Net loss reported for the quarter, at KWD0.62mn (1Q15: KWD0.58mn, 4Q15: KWD1.4mn, EFGe: KWD0.61mn, all in net profits) Increased leverage. CGC’s debt-to-equity ratio hit 1.3x (0.77x in March 2015, 1.19x in December 2015), whilst its net-debt-to-equity ratio reached 1.10x (1.08x in December 2014, 0.96x in December 2015)   Main positive: Another record revenue figure for the quarter, at KWD69.2mn, beating our estimate of KWD64.9mn by 7% and growing 12.6% Y-o-Y and 1.8% Q-o-Q. (Company disclosure, Sara Boutros, Mai Attia)   Combined Group Contracting: KWD0.78 as of 19 May 2016, Rating: Neutral, FV: KWD0.74 per share, MCap: USD319 million, CGC KK / CGCK.KW