3Q16 Results Highlights: Revenue – SAR681mn, -16% Y-o-Y, -23% Q-o-Q, -21% vs EFGe; Gross Profit – SAR84mn, -60% Y-o-Y, -49% Q-o-Q, -48% vs EFGe; Operating Income – SAR24mn, -85% Y-o-Y, -76% Q-o-Q, -76% vs EFGe; Net loss– SAR59mn vs. net income of SAR72mn in 3Q15, SAR26mn in 2Q16 and SAR19mn EFGe   Saudi International Petrochemical Company (Sipchem) announced its 3Q16 results yesterday with an extremely poor performance as its bottom-line fell into the red (losses of SAR59mn) and missed both our (profit of SAR19mn) and consensus forecasts (profits of SAR40.5mn). The largest surprise in the numbers were revenues, which fell 23% Q-o-Q and missed out expectation by 21%. According to the earnings release, the drop in sales Q-o-Q was due to: i) Lower prices for acetyl products (AA –4%, VAM -6%); ii) a drop in sales volumes of methanol, BDO and acetyl products; iii) decreased production from plant interruptions at the carbon monoxide, acetic acid and ethyl acetate plants, and iv) deferral of a methanol shipment into 4Q16.   Along with the weakness in sales from lower prices and volumes, we believe costs/tonne were also likely inflated by the shutdown at the complex, which we took into account in our numbers. Other factors that led to the weaker results Q-o-Q include much higher zakat charges and lower other income.  The miss appears to primarily be driven by lower volumes as EBITDA margins of 31.8% were not much lower than our 33.6% expectation.   Overall, a very poor set of numbers that were well  below the markets expectations. While we are a bit concerned by these numbers, we expect a rebound back to profitability in 4Q on the back of improved volumes, which appeared to be the main factor behind the weak performance. We maintain our Neutral rating, but expect the stock is likely to come under pressure following the weak numbers. (Company, Yousef Husseini)   SIPCHEM: SAR12.44 as of 19 October 2016, Rating: Neutral, FV: SAR14.00 per share, MCap: USD1,216mn, SIPCHEM AB / 2310.SE