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

I would like to take this opportunity to ask our respective attendees to share their e-mail addresses with me through the chat box so that I can add them to our mailing list where they can receive our latest updates and invitations to any upcoming analyst calls. Mr. Arif, should we proceed?

Yes. [Technical Difficulty]

Hello, everyone, this is Laura from the Corporate Communications team of Aamal Company. I hope everyone is doing well today. I want to welcome you all to Aamal Company's 2022 9 Months Financial Results Investors Call. On this call, we have Mr. Mohammed Arif, Account Manager of Aamal Company; and Mr. Zaid Shelleh, Investor Relations Manager at Aamal Company. We will conduct this call with first Mr. Zaid presenting the company's results on behalf of the management, followed by a Q&A session [indiscernible]. Please proceed.

Good afternoon. [Technical Difficulty] on the presentation of Aamal Company results for the 9 months ended on 30 September, 2022. My name is Zaid Shelleh, Investor Relations Manager at Aamal, and I will be delivered during this presentation along with our group CFO, Mr. Mohammad Al Ramahi; and the Account Manager, Mohammad Arif, who will be available to answer your questions in a few minutes to come. Accompanying this call is a short presentation, which can be viewed and downloaded from the Aamal website. I will begin by summarizing the performance highlights of the 9 months of this year as set out in Slide 2 of this presentation. We are very pleased to report that Aamal has continued the excellent momentum established in the first half of the year into the third quarter. All 4 segments delivered positive top line growth, with revenue growth of 37.5%, attributable to net profit growth of 23.6% year-on-year. These are very strong set of financial results. This performance demonstrated the successful execution of our strategy with impressive performance from our industrial manufacturing, managed services and property segments, in particular, all driving growth. Recent months has seen continued improvement in the operational environment with the removal of the pandemic-related restrictions and preparation ramping up for the FIFA World Cup next month. Moreover, the World Bank is forecasting that Qatar's economy will be the fastest-growing economy in the GCC in both 2023 and 2024. These factors along with the continued impetuous -- provided by the Qatar National Vision 2030, all mean that Aamal is looking forward with considerable optimism. The financial results set on our Slide 4 underlines Aamal's strong performance in the first 9 months of 2022. We are pleased to report revenue and profit growth across the 4 segments. Our Industrial Manufacturing segment performed particularly strongly with revenue increasing by 49%, primarily driven by impressive performance at Aamal Cables and Aamal Cement industry. Managed Services demonstrated continued performance momentum with revenue up 75.8% as business benefited from the ease in pandemic-related restriction and preparations for the World Cup. Trading and distribution revenue is up by 34%, with Ebn Sina Medical, a standout performer. Our Property segment reported an 18.3% increase in revenue due to a higher occupancy level and rental rates at both City Center Doha and Aamal Real Estate. We are also pleased to report that our balance sheet remains underpinned by the sustained financial strength and disciplined cost control, with gearing remaining at 4.3%. Turning now to each segment by starting at Slide 6. Industrial manufacturing performed very well with revenue up 49% and net profit up 65.3% year-on-year. Notable development include: Aamal Maritime Transportation Service seeing sustained high demand and increased global shipping rates, Aamal Cables increasing its revenue by 100 -- Aamal Cables increasing its revenue by 133% and Aamal Cement industry launching new products and further improving operational efficiency. Aamal Readymix has faced ongoing challenges, rising costs of diesel and direct material along with fierce price competition have eroded profit margins, while the completion of construction projects associated with the FIFA World Cup has inevitably seen decline in demand. Nevertheless, the short-term outlook for the segment remains positive. Turning to Slide 7, In Ebn Sina Medical, one of the largest business units of our trading and distribution segment delivered strong performance both financially and in terms of strategic progress. Highlights include adding new products with their existing suppliers to increase market share, signing new agreements with suppliers from the U.S.A., from Turkey, from the U.K. and Canada, completing Qatar's first fully automated warehouse and adding new stores for Ebn Sina pharmacies, which is expected to be completed in November 2022. Aamal Trading also increased its promotions and product range with the addition of 2 new tires brands, Fulda and Veltour, increased marketing for Bridgestone tires and the winning of new contracts, Mowasalat, MED and Woqod. Moving to Slide 8 and the performance of our Property segment. Presently, revenue and net profit in the Property segment increased by 18.3% and 25% year-on-year, respectively. Please, Laura, can you move the slide, to Slide 8. Thank you. On Slide 8, pleasantly, revenues and net profit in the Property segment increased by 18.3% and 24.9% year-on-year, respectively. Contributing to this growth was an increase in the rental rates and occupancy level to over 90% at Aamal Real Estate and City Center Doha. City Center saw 15 new shops opened in the period, including Brands for Less and further 20 new stores opening are planned in the final quarter of 2022. Renovation and upgrades continue at Medinat Khalifa and Al Bilad property. Turning to Slide 9 and the fourth segment Managed Services. The excellent revenue and net profit performance of the segment, up by 75.8% and 592% respectively, is largely attributable to the impact of our entertainment and travel business of eased pandemic-related restrictions. During the period, we upgraded facilities at Fun City with introduction of new rides and video games. At Aamal Services contract links with the FIFA World Cup are now reaching peak capacity. A continued focus on securing new contracts and diversifying the client base resulted in an impressive profit growth of 53% at ECCO Gulf. Aamal in components, so far this year demonstrates the benefit of our diversified business model and good progress against strategic objectives. This is underpinned by the company's robust financial position, our focus on cost management and the hard work of our colleagues across the business. We have a strong platform to explore exciting new opportunities across existing and new sectors that will add further value to our business model and deliver growth to our shareholders. Aamal is looking forward for the remainder of 2022 and into 2023, with confidence. This concludes our presentation. Mr. Mohammed Arif and I now kindly welcome any questions you may have. Laura, I leave the microphone to you, please.

[Operator Instructions] Anyone has any questions? [Operator Instructions]

Hello, everybody. I just want to say hello to everybody. This is Rashid Al-Mansoori.

I would like to say a word. Mr. Rashid. I would like to introduce Mr. Rashid Al-Mansoori, our new esteemed CEO, who joined Aamal recently just a few months ago. I welcome Mr. Rashid Al-Mansoori and I would request if you could add your valuable insight and say a few words, if you don't mind.

Well, thank you very much, Zaid. I'm happy to join this meeting and, I'll make sure that I'll be here for our analysts and our investors to answer any questions from my side. And with my background and with Qatar Stock Market, I'd look to add value to our listed company, Aamal. I'm proud for the last 6 months that we had a good achievement, and we are proud of the -- what we achieved so far, and we'll keep it [Foreign Language] in this way forward. Thanks for being here today.

Thank you, Mr. Rashid. Yes, Mr. Zohaib, please give us your questions.

Aamal, a very warm welcome to the new CEO, Mr. Rashid. On -- with regards to your Maritime segment, now we have seen that the maritime rates have started to come down. Are you also witnessing the same in [Technical Difficulty] Should I ask my other questions together? Or should we do it one by one?

Yes, you can ask together, no problem.

Okay. So the other question is regarding the cable segment, it has seen a significant growth. Is this related to the Kahramaa project that was awarded to you? If so, how much of that project has been utilized, drawn down? And how much will be -- can we expect going forward? Thirdly, you have -- if I remember correctly, there was a new contract regarding the supply of drivers during the World Cup. Has that contract started? And which segment will that be included in managed services or trading? So those are my 3 questions.

[Technical Difficulty]

Mr. Arif, we cannot hear you. Your voice is not very clear.

Can you hear me now?

Yes.