        Net income – OMR1.15mn, +61% Y-o-Y, -21 Q-o-Q, +45% EFGe
        Revenue – OMR32.1mn, +40% Y-o-Y, +4% Q-o-Q, +7% EFGe
 
Al-Jazeera Steel has reported its 2Q18 headline results, reporting net profit of OMR1.15mn (+61% Y-o-Y, -21 Q-o-Q), coming in higher than our OMR0.8mn estimate. The company reported revenue of OMR32.1mn (+40% Y-o-Y, +4% Q-o-Q) and came in 7% ahead of our estimate,  driven largely by commodity price and partly due to volume changes, in our view.
 
Overall, a good set of results, despite being in a seasonally low quarter, in terms of construction activities. Although the full details have not yet been disclosed, we assume the earnings beat could be due to: i) better-than-expected product prices on a favourable steel price movement during the quarter; ii) high margin product sales mix; and/or iii) better-than-expected product volumes. Even though we expect sales volume to be sustainable, to a large extent, as a result of product diversification initiatives by the company and due to structural shift in supply side as a result of China plant shut downs, steel price volatility expected over the near term, especially after the recent US trade policies, is a source of concern. We currently have a Neutral rating on the stock.  
 
Jazeera Steel: OMR0.300 as of 12 Jul. 2018, Rating: Neutral, TP: OMR0.258/share, MCap: USD99mn, ATMI OM/ATMI.OM
Sameer Kattiparambil