Revenue – AED1.7n, -13% Y-o-Y, no change Q-o-Q, +3% vs. EFGe Gross profit – AED960mn, -23% Y-o-Y, -3% Q-o-Q   Net profit – AED902mn, -12% Y-o-Y, +2% Q-o-Q, +13% vs. EFGe Contracted sales – AED1.7bn, -10% Y-o-Y, +5% Q-o-Q, matching EFGe   Damac Properties (Damac) reported its financial results for 3Q16. Contracted sales were at AED1.7bn, down 9.9% Y-o-Y, matching our estimate, bringing 9M16 total to AED5.3bn (-23.7%) and confirming our expectation of weakness in sales activity. Revenue came with a slight beat (2.8%), with the land contribution coming in higher than the average for the previous quarters at 40.5% (3Q15: 24.3%, 2Q16: 17.8%), which we attribute to Damac’s recent increase in villas offering in Akoya Oxygen. The quarter saw lower-than-expected revenue from property development (-31.9% Y-o-Y, -27.9% Q-o-Q), which is so far, early to be seen as sign of slower construction pace. The weakness can be attributed to slower construction activity during the months of the summer. Net income came with a 13% beat, attributed to lower-than-expected S,G&A and higher-than-expected income from cancellations.   Main positives: 1) Revenue slightly beat our estimate (variance: +2.8%) coming in at AED1.7bn (-13.4% Y-o-Y, -0.3% Q-o-Q); with higher contribution of revenue from land sales. 9M16 revenue was AED5.1bn (-24.3% Y-o-Y); 2)Lower-than-expected SG&A, which we attribute to lower sales activity which came in at AED195.0mn (-29.8% Y-o-Y, -1.0% Q-o-Q, -20.0% vs. EFGe). This explained roughly c50% of the net income beat; 3)Net income beat by 13.1%, coming in at AED902mn (-11.7% Y-o-Y, +1.7% Q-o-Q), also helped by higher-than-expected income from cancellations (3Q16: AED149mn, EFGe: AED100mn). 9M16 net income was AED2.8bn (-22.7% Y-o-Y)   Main negatives: 1)Contracted sales down 9.9% Y-o-Y, coming exactly in line with our estimate of AED1.7bn (+5.0% Q-o-Q). 9M16 figure totalled AED5.3bn (-23.7% Y-o-Y). Our 2016 estimate of AED7.1bn imply cAED1.8bn for 4Q16 which we believe is achievable in a seasonally-favourable quarter; 2)Weakness seen in revenue from property development (AED1.0bn, -31.9% Y-o-Y, -27.9% Q-o-Q), which we attribute to slower activity during the months of the summer along with two Eid holidays falling within the quarter. However, this was fully compensated for by higher revenue from land (AED709mn, +44.2% Y-o-Y, +127% Q-o-Q); 3) Gross profit margin slightly lower despite the higher contribution from land to total revenue, averaging 54.9% in 3Q16 (3Q15: 61.8%, 2Q16: 56.5%) and 57.4% in 9M16 (9M15: 60.7%). (Mai Attia, Sara Boutros, company)   DAMAC (DU): AED2.19 as of 6 Nov 2016, Rating: Neutral, FV: AED2.30 per share, MCap: USD3,610 mn, DAMAC UH / DAMAC.DU