Galfar Engineering and Contracting Company (Galfar) released its headline figures for 2Q16. Revenue came in at OMR90.1 (+10.5% Y-o-Y, +7.1% Q-o-Q, EFGe: +9.8%). Net income after tax and before minority was OMR0.10mn, vs. OMR1.3mn in net loss in 2Q15, OMR0.44mn in net income in 1Q16 and our estimate of OMR0.21mn. We estimate new contract awards (undisclosed) to have come at OMR22mn in 2Q16. We will provide more details once the full financial statements are reported.   While Galfar’s 1Q16 spike in new awards is encouraging, we note that the company’s depleted equity base and high leverage (net debt-to-equity at 2.3x, and net debt-to-market cap at 3.7x in March 2016) give the company a higher risk element vis-à-vis its peers. The stock’s trading multiples partially reflects these concerns with PER of 13.9x and an EV/EBITDA of 6.3x in 2017e (peers: 15.1x and 6.8x, respectively). We expect Galfar to report net losses of OMR0.5mn in 2016e. We have a Sell rating on the stock. (MSM, Mai Attia, Sara Boutros)     Galfar: OMR0.11 as of 14 July 2016, Rating: Sell, FV: OMR0.07 per share, MCap: USD113mn, GECS OM / GECS.OM