Galfar Engineering and Contracting Company (Galfar) released its headline figures for 1Q2016. Revenue came in at OMR84.1 million (-10.8% Y-o-Y, -11.6% Q-o-Q, EFGe: +5.0%). Net profit after tax was OMR0.096 million, versus OMR1.3 million in 1Q2015 and OMR25.6 million net loss for 4Q2015. This was above our estimate of a net loss of OMR2.2 million for Q1. We will provide more details once the financial statements are reported.   While Galfar’s recent spike in new awards is encouraging, we note that its depleted equity base and high leverage (net debt-to-equity at 2.4x, and net debt-to-market cap at 4.4x in December 2015) give the company a higher risk element vis-à-vis its peers. We expect the company to report net losses for the coming three years, further straining its equity base and offering negative ROEs for investors. We have a Sell rating on the stock. (MSM, Mai Attia, Sara Boutros)