4Q2015 results highlights: i) net income – OMR1.3mn (-57% Y-o-Y, -5% Q-o-Q) -5% EFGe; ii) operating profit – OMR1.45mn (-21% Y-o-Y, flat Q-o-Q) -4% EFGe; and iii) revenue – OMR6.1mn (-12% Y-o-Y, -11% Q-o-Q) -9% EFGe   Al Anwar Ceramics (AACT) reported its 4Q2015 headline numbers; net profit was OMR1.3 million (-57% Y-o-Y, flat Q-o-Q), broadly in line with our estimate (-5%). It reported operating profit of OMR1.45 million (-21% Y-o-Y, flat Q-o-Q, -4% EFGe) over revenues of OMR6.1 million (-12% Y-o-Y, -11% Q-o-Q, -9% EFGe). The drop in reported net earnings Y-o-Y was driven by: i) a 12% drop in revenue (9% below our estimate); ii) a squeeze in operating margin by 250bps Y-o-Y to c24% (better than our estimate of c21%, and 21.5% in 3Q2015); and iii) strong YoY comparison as it reported a OMR1.5 million one-off investment gain in 4Q2014; excluding last year’s one-off investment gain its recurring earnings fell c13% Y-o-Y.   Our view: As expected, Anwar Ceramics reported another operationally weak quarter driven by lower revenue and weaker margins Y-o-Y. Strong competition in the market (especially in Saudi Arabia - its second largest market after Oman), fuelled by the demand-supply imbalance created by regional conflicts and imported products from India and China put pressure on sales volume and prices, in our view. In addition, cost escalation from gas prices has put further pressure on its operating margins. With a weak outlook for construction activities regionally, we expect product demand to stay muted for some time, in our view. (Company disclosure, Sameer Kattiparambil)