GB Auto posted its 4Q2015 results with headline earnings coming in at cEGP28mn, down 12% Y-o-Y. Earnings were deflated by a number of non-recurring items including cEGP60mn in FX losses, cEGP19mn in provisions and cEGP20mn in investment impairment; accordingly, recurring earnings were up 24% Y-o-Y mainly on substantially lower taxes Y-o-Y (EGP4mn versus EGP42mn a year ago) likely on losses at some of the Egyptian subsidiaries, higher positive minority interest (EGP46mn vs. EGP3mn in 4Q14) indicating that losses at the Iraqi business have widened and lower net interest costs (-16% Y-o-Y)   Revenue fell 23% Y-o-Y and was 30% below our estimate on lower to flattish top-line across nearly all segments (passenger cars were the main drag) with financing businesses and after-sale the main bright spot (details in segmental highlights below).   Gross profit was flattish Y-o-Y (+1%, -12% versus our estimate due to the revenue miss) with gross margin widening c4.1pp Y-o-Y on better margins across most segments predominantly passenger cars in Egypt due to higher selling prices. EBITDA margin improved a far tamer c50bps Y-o-Y to 8.5% as SG&A costs surged 30% Y-o-Y (+10% versus estimate) with EBITDA falling 18% Y-o-Y and missing our estimate by 26%.   Overall a weak set of numbers due to the FX situation in Egypt and worsening performance of the Iraqi operation. However, we expect FX shortages to somewhat ease following this week’s EGP devaluation with the company (along with other players in the market) having already taken some pre-emptive price increases (the reason for the big margin improvement in GB Auto’s 4Q15 results). (Hatem Alaa, Nada Amin, company)   GB Auto: EGP2.57 as of 15 March 2016, Rating: Buy, FV: EGP5.00 per share, MCap: USD315 million, AUTO EY / AUTO.CA