Headline net income: SAR22.5mn, -18% Y-o-Y, -28% Q-o-Q, -21% vs. EFGe Gross profit: SAR85.4mn, +2% Y-o-Y, +10% Q-o-Q, -6% vs. EFGe Operating profit: SAR36.2mn, -5% Y-o-Y, +23% Q-o-Q, -7% vs. EFGe   Halwani reported headline 3Q16 results, with earnings down 18% Y-o-Y (-21% vs. EFGe, mainly on weaker-than-expected top-line) despite cSAR7mn in FX losses booked in 3Q15 driven by higher:   Zakat and taxes (3Q15 was low as it included the retroactive adjustment to reflect the reduction of Egypt's tax rate to 22.5% from 30%) Depreciation charges (started fully depreciating the new cSAR430mn KSA complex from July 2016; also, the new Egypt poultry factory); and SG&A costs   Revenue was flattish (-9% vs. EFGe) on continued weak export and KSA sales, as well as EGP devaluation, which deflated sales from the Egyptian operation. The revenue outcome was better than 2Q16, which saw a 12% decline, but this was partly due to Ramadan timing differences (a weak month for the company’s products). Gross margin remained on an uptrend for the seventh quarter in a row (+30bps Y-o-Y) despite higher depreciation charges, likely on commodity price benefits with gross profit +2% Y-o-Y (-6% vs. EFGe). Operating margin, however, fell c80bps Y-o-Y as SG&A costs rose 7% Y-o-Y, mainly on higher selling and marketing costs in Egypt to support new products (mainly value-added poultry), as well as undisclosed receivable provisions booked in the quarter (vs. none last year).   We have a Neutral rating on the stock, with continued weak revenue trends being the key red flag from the results set. We will be revising our numbers to reflect the results. (Earnings release, Hatem Alaa, Nada S. Amin)    Halwani Brothers: SAR50.51 as of 17 October 2016, Rating: Neutral, FV: SAR68.00 per share, MCap: USD385mn, HB AB / 6001.SE