Galfar Engineering and Contracting Company (Galfar) has released its headline figures for 4Q2015. Revenue came in at OMR90.5 million (+2.7% Y-o-Y, +8.6% Q-o-Q, EFGe: +27%). Net loss after tax (before minority) came in at OMR23.2 million, versus OMR2.2 million in net loss for 4Q2014 and OMR3.4 million in net loss for 3Q2015. The company booked OMR30.2 million in provisions for impairment of receivables, to account mainly for Muscat Expressway project and Central Corridor Project. Excluding these amounts, net profit after tax (before minority) would have come at OMR7.0 million, better than our expected net loss of OMR3.8 million. This brings 2015 revenue to OMR345 million (-7.3% Y-o-Y) and net loss after tax (before minority) to OMR26.6 million. We note that the booked provisions wipes off roughly 30% of the company’s equity base. The company announced it has hired a consultancy firm as a financial advisor, with the aim of strengthening the balance sheet in a 12-18 months transformation program, with results expected to be seen starting 2Q2016. The company’s backlog reached OMR640 million in December 2015 (December 2014: OMR675 million).   Our view: We reiterate our Sell recommendation on the name, with our FV implying a downside potential of 35%. The stock has underperformed MSM, and we argue will continue to do so, given the deteriorating economic and industry outlook. The company’s depleted equity base and high leverage (net debt-to-market-cap at 6.8x in September 2015) also give the company a higher risk element vis-à-vis its peers. We expect the company to report net losses for the coming three years, further straining the company’s equity and offering negative RoEs for investors. (MSM, Mai Attia, Sara Boutros)   Galfar: OMR0.06 as of 11 February 2016, Rating: Sell, FV: OMR0.04 per share, MCap: USD70 million, GECS OM / GECS.OM