Galfar Engineering and Contracting Company (Galfar) released its headline figures for 2016. Revenue came in at OMR340.1mn (-1.5% Y-o-Y), while net loss after tax and before minority interest was OMR5.8mn (vs. OMR28.9mn in 2015, also in net loss). This implies OMR82.6mn in revenue in 4Q16 (-8.8% Y-o-Y, -0.9% Q-o-Q, +1.7% v. EFGe) and OMR6.0mn in net loss after tax and before minority (4Q15: OMR25.6mn, 3Q16: OMR0.3mn, and EFGe: OMR0.7mn, all in net losses). Further pressuring the numbers, was OMR2.3mn booked in impairment of receivables and OMR3.1mn in loss on investment, excluding which the bottom line would have also been in the red in both 4Q16 and 2016. We estimate new contract awards (undisclosed) to have come at cOMR83mn in 4Q16, bringing 2016 total to OMR358mn, topping our estimate for the year of OMR320mn by 11%.     Galfar’s performance have continued to show weakness, with the strong inflow of awards in 2015-16 failing to reflect 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 3.5x in September, and net debt-to-market cap at 5.5x) 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. The stock underperformed the general market, a reflection of such concerns (-16% over the last three months vs. +3% for MSM and -22% over the last six months vs. -2% for MSM). We continue to be sellers of the name on a further downside potential of 16.4%. (MSM, Sara Boutros, Mai Attia)     Galfar: OMR0.081 as of 19 Jan 2017, Rating: Sell, TP: OMR0.068/share, MCap: USD89mn, GECS OM / GECS.OM