Revenue – SAR3.86bn, +7% Y-o-Y, +1% Q-o-Q, +1% vs. EFGe Gross profit – SAR922mn, +130% Y-o-Y, +9% Q-o-Q, -0.1% vs. EFGe Operating income – SAR445mn, vs. loss of SAR48mn in 3Q15, +22% Q-o-Q, +4% vs. EFGe Net income – SAR122mn, vs. loss of SAR296mn in 3Q15, +18% Q-o-Q, +142% vs. EFGe   National Industrialization Company (Tasnee) has just announced its 3Q16 results, with earnings continuing to recover following the huge losses reported in 4Q15. Earnings were in line with our forecasts at the operational level, but the bottom-line beat our expectations, likely on the back of higher-than-expected other income (full financials not yet available). We had expected bottom-line earnings to fall back Q-o-Q, as 2Q16 earnings were boosted by SAR76mn in other income related to the company’s hedging and derivatives contracts, but according to the earnings release, other income was even higher this quarter, although the company did not mention what drove the increase. Operating earnings came in line with our forecasts (gross profit -0.1%, EBIT +4%), with gross margins continuing to improve as expected (23.9% vs 22.2% in 2Q16 and our 24.1% forecast). We believe the better operational performance was driven mainly by an increase in TIO2 prices (+3-4% Q-o-Q), higher PE and PP spreads to propane – which would have driven higher margins at SPC (PDH unit) and SEPC (ethylene cracker) – as well as better acrylate prices, which should have improved earnings at SAAC. The company noted that earnings were also boosted by higher other income Q-o-Q despite higher interest expenses, higher marketing expenses and an increase in zakat. The improved earnings Y-o-Y were mainly a function of higher volumes, lower feedstock costs and higher other income, according to the release.   Overall, a solid set of results that were operationally in line with our forecasts. We remain Neutral on Tasnee and, while we acknowledge the stock’s long-term potential as earnings continue to recover, we believe this is priced in for the medium term, and that rising interest expenses are likely to continue to weigh on the bottom-line. (Earnings release, Yousef Husseini)   National Industrialization Company: SAR13.60 as of 17 October 2016, Rating: Neutral, FV: SAR14.50 per share, MCap: USD2,426mn, NIC AB / 2060.SE