Net loss – SAR48 million, versus net profit of SAR83.4 million in 4Q2014 and SAR121 million in 3Q2015, versus EFGe of SAR49 million Gross profit – SAR117.1 million, -38% Y-o-Y, -34% Q-o-Q, +7% versus EFGe Operating income – SAR63.4 million, -49% Y-o-Y, -58% Q-o-Q, -26% versus EFGe   Sahara Petrochemical Company (Sahara) announced its 4Q2015 results highlights, with earnings falling into the red and coming in well below our earnings forecast of SAR49 million, as well as Bloomberg consensus forecasts of SAR85 million. The strong decline in earnings was driven by: i) a decline in product prices (PE -8% Q-o-Q, PP –15%, Acrylic acid –18%, EDC -26%); ii) a decline in demand for products from the company’s new projects (SAAC and SAMAPCO), which generated losses this quarter, according to the earnings release; iii) write-downs in inventory, likely at the new projects, in our view; iv) lower earnings at 24%-owned SEPC due to provisions taken on product prices; v) a SAR30 million one-off expense related to the company’s restructuring programme, which was expensed to this quarter; and vi) foreign exchange losses (likely due to some cash held in Euros, in our view). On the gross profit level, Al Waha actually showed a decent performance, beating our forecast by 7%, but EBIT fell short of our forecasts as S,G&A almost doubled Q-o-Q (we suspect the SAR30 million restructuring expense was included in S,G&A but it is not clear as full financials are not yet available). Below the operational level, the results were full of one-offs including inventory write-downs, provisions and forex losses, which was likely the main reason behind the losses this quarter. It is not yet clear how the other subsidiaries performed, but based on the highlights, it appears the new projects saw their losses accelerate significantly during the quarter.   After a very strong showing in 3Q2015 when it appeared that the company had gotten their costs under control, we think these results are extremely disappointing and we are concerned with the heavy losses at the new projects. While the start-up of the butanol plant should definitely improve costs next year, at the current price levels and based on these results, we think it is likely the new projects would still lose money. The earnings release mentions that the restructuring conducted this year should drive cSAR30 million in cost savings in 2016 but that would not be enough to offset the poor economics at the new projects, in our view.   We have a Buy rating on Sahara, but think risks have escalated following these results, and we will need to review the full detailed financials to see how the company’s other operations performed. While we see value for Al Waha and SEPC at these levels, our main concern is that the issues at the new projects would overshadow any strong performance from Al Waha and SEPC. (Earnings release, Yousef Husseini)