Galfar Engineering and Contracting Company (Galfar) released its headline figures for 3Q16. Revenue came in at OMR83.3mn (unchanged Y-o-Y, -7.5% Q-o-Q, EFGe: -4.0%). Net loss after tax and before minority was OMR0.345mn (EFGe: OMR0.541mn in net loss) vs. OMR3.32mn also in net loss in 3Q15, and OMR.107mn in net income in 2Q16. This brings 9M16 revenue to OMR257.5mn (+1.1% Y-o-Y) and net income before minority to OMR0.195mn (vs. net loss of OMR3.31mn in 9M15). We estimate new contract awards (undisclosed) to have come at OMR60mn in 3Q16, bringing 9M16 total to OMR275mn (2016e: OMR320mn).   The outlook for Galfar is skewed to the negative, in our view. While the inflow of awards YTD are encouraging, we note that this has not reflected positively on the company’s results, an indication of execution and collection issues, as confirmed by management. The company’s depleting equity base and high leverage (net debt-to-equity at 2.3x in June, and net debt-to-market cap at 4.0x) give the company a higher risk element vis-à-vis its peers. Galfar’s attempts to turnaround the operations and improve the capital structure are yet to be proven successful. 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: OMR0.100 as of 13 October 2016, Rating: Sell, FV: OMR0.068 per share, MCap: USD114mn, GECS OM / GECS.OM