Aamal Company Q.P.S.C. (AHCS) Earnings Call Transcript & Summary

Hello, everyone. This is Laura from the Corporate Communications team of Aamal Company. I hope everyone is doing well and staying safe today. I want to welcome you all to Aamal Company's 2021, 9 months Financial Results Investors Call. And on this call, we have Mr. Mohammad Ramahi, the Adviser to the CEO of Aamal Company; and Mr. Zaid Shelleh, the Risk and Compliance Manager at Aamal Company. We will conduct this call with first the management presenting the company's results followed by a Q&A session. Mr. Ramahi, please proceed.

Good afternoon, everyone and welcome to this presentation of Aamal Company's results for the 9 months ended September 30, 2021. My name is Mohammad Ramahi, and I am the adviser to the CEO of Aamal Company. Accompanying this call is a short presentation, which can be viewed and downloaded from Aamal website. I will begin by summarizing highlights of the first 9 months of the year, as set out on Slide 2 of the presentation. This was a strong 9 months for Aamal, reflecting the resilience of its diversified business strategy and ability to successfully meet all challenges. The momentum of the growth and profitability established from the first half year was maintained for the 9-month period, with solid contribution from all business segments. Industrial manufacturing, managed services and property, all delivered strong double-digit increases in revenues and net profits, whilst we continue to focus on operational efficiency, production based optimization and financial discipline. We continue to lift capital investment on growth opportunities while maintaining a strong balance sheet and low gearing, meaning that Aamal remains well positioned to weather any future impacts of the pandemic and to benefit from the continued recovery of the wider economy. The numbers on Slide 4 demonstrate the extent of the strong performance in the 9 months today to the end of September. Revenue increased by 13.2% and net underlying profit increased by 282.7%. Our industrial manufacturing, property and managed services segments each delivered strong revenue, profit and margin improvement compared to the first 9 months of 2020 as benefiting from the easing of lockdown related restrictions. Turning now to each of our segments. Industrial Manufacturing performed well, with revenue increasing 94% year-on-year to QAR 282 million and total net profit up 18.7% to QAR 37.6 million. In 2020, the pandemic negatively impacted projects in this segment, housing operations. However, in the first 9 months of 2021, all subsidiaries benefited from the trend towards normalization in demand levels and increased project activity as well as recent supply chain pressures. As demand continues to track the increasing flow of contracts relating to the 2022 World Cup and Qatar's pipeline of the other major infrastructure projects coming on stream, volumes are expected to increase. This will support gradual margin improvement over the last quarter of 2021 and into 2022. Turning to trading and distribution. 2020 show unprecedented demand during the pandemic for medical products as health care facilities upgraded equipment to ensure they could provide the best care for their patients. A gradual return to normality, which we have thankfully seen this year has led to a decrease in demand for such products. However, Ebn Sina and Aamal Medical continued to perform well financially and operationally, driven by pricing enhancements and contract wins as well as retaining a significant portion of the increased revenue and profit levels recorded in 2020. Turning to the property segment, revenue and net profit in the property segment were up 52% and 965% year-on-year to QAR 188 million and QAR 144 million respectively. These numbers reflect the ongoing normalization of rental revenues and occupancy levels compared to 2020. There were no fair value adjustments to the investment property in this period. City Center Doha saw 38 new retail outlets opened with a further 19 planned by year-end. Work continues to develop the frontage of city center, further improving this customer experience and providing additional leasing space. Turning to managed services. The return to normal continues for parts of the Managed Services segment. Revenue was up 30.3% year-on-year to QAR 45 million, and net profit rose to QAR 1.1 million. The majority of our businesses performed well, reflecting the positive impact of easing of restrictions. We expect to see a further improvement in their financial performance as the economy recovers and restrictions ease further. Turning to Slide 11. The strength and resilience of Aamal's diversified business strategy has again been demonstrated over the past 9 months over with solid contributions made by all segments. The initiatives undertaken to navigate the challenges both the pandemic and to target growth and operational efficiency delivered strong year-on-year revenue and net profit growth. This strategy is underpinned by our financial discipline across all segments of the business and by our strong balance sheet, which remains a key asset with low gearing and adequate liquidity. Although some uncertainty from the pandemic remains, the outlook for Aamal is strong, and the Board is looking forward with confidence to the final quarter of 2021 and beyond. This concludes our presentation, and I now welcome any questions you may have.

Thank you, Mr. Ramahi. Thank you, everyone. [Operator Instructions] Mr. Zohaib Pervez, please go ahead.

Thank you for the presentation. I had a -- could you give us some idea of what is leading the growth in your industrial manufacturing sector?

Yes, absolutely. The revenue -- the profits also there coming from the Doha Cable, the cable business that we have, it is there. And mainly the maritime. So the demand this year, as you have noticed, for the shipping agency, the maritime was increased. So we have noticed significant growth in the demand and the profits from this company increase. So the average daily rent for the vessel was less than $10,000. Now it is double this amount or triple or more than that. It is a significant increase from the maritime also that contributed in the industrial segment.

Okay. If you could remind me how many ships do you own?

We own 2 vessels, and they are listed to outside. Currently -- to give you some highlights of the numbers, currently, the average daily rent for the vessel is between $40,000 and $45,000.

Okay. So it's even more than the $20,000 you were mentioning. That's for 2 vessels?

Yes.

Okay. And so of this QAR 282 million that you have for 9 months, how much is the contribution of maritime.

This is a commercially sensitive information, but it is significant, I would say.

And on cable, you said that the cables is also improving -- is this because of the Kahramaa contract?

A big portion of it from Kahramaa and this project during the last 9 months -- for the 9 months, it contributed around QAR 100 million in the revenue.

QAR 100 million. And could we have any...

Contribution in the revenues, yes.

Yes. Could we have any sense of the margins on this business?

No. This is again, the margins on this business are known to -- in the market and the benchmark. However, also for the individual [Technical Difficulty] My apologies, I can't hear that someone is talking.

I don't know who that is.

It's not from our side. I don't know who is that. I don't if you get my answer or not.

Okay. I'm sorry. Mohammad, I did not understand. Just a part on the margins. Okay.

When you say the word margin, it figures the others to speak. If you don't mind, I will not give you the margin. So let's skip it to the other question.

Okay. My last question is, could you give us -- for the city center, what is your current occupancy?

You have the excellent questions. Again, for the occupancy, I can tell you, it is increasing. However, the exact occupancy percentage is commercially sensitive information. I can't reveal it right now. However, the total leasable area in the city center will be 142,000 square meters after we add the 8,000 under development currently.

Thank you Mr. Mohammad, and thank you, Zohaib. A kind reminder to please type your name and e-mail address in the chat box if you have any questions. All right. So I believe there are no further questions. Thank you, everyone. This concludes today's conference call. You may now disconnect.

Thank you, everyone, for participating.