Net income – OMR1.87mn, +112% Y-o-Y, +126% Q-o-Q, +109% EFGe Revenue – OMR20.4mn, +2% Y-o-Y, +40% Q-o-Q, +13% EFGe   Al-Jazeera Steel has reported its 2Q16 headline results. Net profit more than doubled Y-o-Y to OMR1.87mn (well above our estimate of OMR0.9mn), which is likely due to below-EBIT items and significant margin expansions. The company’s revenue inched up 2% to OMR20.4mn (+40% Q-o-Q), 13% above our estimate, which we suspect was due to stronger-than-expected sales volume growth and utilisation rate of its capacity largely due to lower import pressure from emerging markets and partly on new markets. The reported 2Q16 net profit margin of 9.2% (vs. 4.4% in 2Q15, 5.7% in 1Q16, vs. 5.0% EFGe) is the strongest in the recent quarters.   Our view: Al-Jazeera Steel has reported its strongest ever quarterly net profit in 2Q16 in an otherwise challenging environment, although details have not yet been disclosed, but we assume the earnings surge could be due to margin growth due to steel price movement during the quarter. 1H16 net profit of OMR2.7mn already outstrips our FY16 earnings estimate of OMR2.2mn and is an upside to our forecast and valuation. Even though we expect the positive trend to continue in the short term, the seasonality impact would challenge further volume growth in 2H16 vs. 1H16, in our view. (Earnings release, Sameer Kattiparambil, Tarek El Shawarby)   Jazeera Steel: OMR0.22 as of 14 July 2016, Rating: Neutral, FV: OMR0.20 per share, MCap: USD71mn, ATMI OM / AJTM.OM