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 today. I want to welcome you all to Aamal Company's 2023 9 Months Financial Results Investors Call. On this call, we have Mr. Mohammad Arif, the Accounts Manager; and Mr. Zaid Shelleh, Investor Relations Manager. We will conduct this call with first, Mr. Zaid presenting the company's results on behalf of the management, followed by a question-and-answer session answered by Mr. Arif. Mr. Zaid, please proceed.

Good afternoon, everyone, and welcome to this presentation of Aamal Company results for the 9 months ended 30th September 2023. My name is Zaid Shelleh, Investor Relationship Manager at Aamal, and I will be delivering this presentation along with Aamal's Account Manager, Mr. Mohammad Arif, who will also be available to answer your questions in a few minutes' time. Accompanying of this call, a short presentation that -- which can be viewed and downloaded from the Aamal website. I will begin by summarizing the highlights of the 9 months of this year as set out in Slide 2 of this presentation. I am pleased to report that Aamal's robust performance reported for the first 9 months of this year has continued to perform well, with revenue and net profit increasing by 2.4% and 1.6% year-on-year, respectively. Aamal trading and distribution, property and Managed Services segments all performed strongly, offsetting the impact on our industrial manufacturing segment of slowdown in projects and reduced global shipping rates compared to the same period last year. The results underline the profits of Aamal diversified business model and the company's ability to capture new opportunities and maintain strong momentum across multiple sectors. This includes the continued development and expansion of City Center Doha as well as new contract wins from our Managed Services segment, which benefited from the acquisition of the company, MMS. The outlook remains positive with significant potential growth drivers across existing and complementary sectors. Qatar's economic growth is expected to remain the fastest in the GCC into 2024 and the opportunities created by the Qatar National Vision 2030 remains considerable. Looking at Slide 4. The financial results underline Aamal's strong performance in the first 9 months of 2023. Of note, trading and distribution achieved particularly strong revenue growth of 17%. Our property segment also performed well with higher rental rates and improved occupancy, increasing both revenue and net profit. Managed Services saw net profit up 22.7%. We are also pleased to report that our balance sheet remains underpinned by sustained financial strength and disciplined cost control, we're giving now at 2.8%, while capital expenditure is down to QAR 18.6 million, primarily due to the completion of the work at City Center Doha. Turning to each of our segments. Looking at Slide 6. Our Industrial Manufacturing segment saw a 23% decline in revenue year-on-year and net loss of QAR 5.9 million. This can primarily be attributed to the reduced activity post FIFA World Cup. Aamal Readymix revenue was hit by the postponement of the construction project and Aamal Cement was impacted by the increased competition and market volatility. Aamal Maritime Transportation was impacted by lower global shipping rates. The segment, nonetheless, continued to successfully deliver on high profit projects throughout the region. With Frijns company, structural steel, completing work on the low-sale international circuit for the recent 2023 Qatar Grand Prix. Despite ongoing market challenges, the outlook for the industrial manufacturing remains positive. The commencement of several infrastructure projects promises to provide some notable market opportunities with Ashghal and Kahramaa tenders, for example, were combined USD 19.2 billion of opportunities to come. Turning to Slide 7. Trading and distribution delivered another strong set of results, recorded increases in revenue and net profit of 17% and 20.4% year-on-year, respectively. This was once again driven by the strong performance of Ebn Sina Medical, which has extended its attractive market positioning through successful business model enhancements, including new stores for Ebn Sina Pharmacy to be completed in November 2023. Aamal Medical performed well with an increase in gross profit ratio, allowing net profit to remain stable despite a reduction in year-on-year revenue for the period. Aamal trading also demonstrated sales resilience benefiting from promotions and price increases, which offset declines in revenue caused by a slowdown in industrial projects and associated fall in heavy vehicle usage. Profit for the [indiscernible] was, however, impacted by increased warehousing costs. Moving to Slide 8 and the performance of our Property segment. Pleasingly, revenue and net profit of Property segment increased by 5.2% and 1.7% year-on-year, respectively, owing to positive performance across City Center, Aamal Real Estate and ECC. City Center Doha store revenue increases to rental uplift and continue to improve customer offering with additional high-quality store opening taking place during the period. Revenue at Aamal Real Estate also increased year-on-year, primarily as a result of high occupancy rate, which reached well over 95% in the period. Turning to Slide 9 and our fourth segment, in Managed Services. The segment saw net profit increased 51.7% year-on-year to QAR 7.7 million. This was driven primarily by the strong performance of Aamal Travel and Family Entertainment, which we're able to effectively capture heightened customer demand during the summer period. The new contract was achieved in the period despite the normalization of activities following the FIFA World Cup also heightened the ongoing growth momentum in the segment. In addition, the improved market position achieved through the acquisition of Maintenance and Management Services company, MMS, promises to be considerable growth driver going forward. To conclude, Aamal performed well during the period, particularly given some notable operating challenges and the normalization of demand followed last year's FIFA World Cup. Across its 4 segments, Aamal subsidiary companies remain partners of choice within several markets and economic sectors, providing diverse exposure to promising opportunities in line with our business model. The company is well positioned to continue delivering long-term shareholders through profitable business operations and expansions into complementary sectors, both inside and outside Qatar. Looking ahead, the outlook remains positive but our strong economic growth forecast and the National Vision 2030, both progress to provide continuous business opportunity within the country and Aamal look forward to playing an active role in the country's economic development. This include concludes our presentation, and we will take your questions.

Thank you, Mr. Zaid. Thank you, everyone, for listening. [Operator Instructions] Mr. Mustafa from [ Al Rayyan ] Investment has a question.

Congratulations on a strong set of results. Just wanted to ask about the Industrial segment with regards to the shipping rates. What is your outlook on that? And how do you see the rates going forward for Q4 and 2024. Also on the Property segment, you've done really well. Is this all stemming from the City Center itself? Or is it the residential property also doing well for you guys?

Thank you very much for your question. Let me answer you for the first one for the Maritime for the Aamal Maritime. Myself Mohammad Arif Qureshi, and let me answer for you this question, particularly Shipping rate in the first 9 months, yes, that there was a big challenges were there, particularly in the first half year also we were having these challenges in their shipping rates. But now we have already signed the deal for the next quarter, which is better than the first 9 months. So we are expecting there will be improvement and positive turns on these shipping rates. And we are even going to the verge. The company is really deep diving in this. Maybe we will find some opportunities even to invest further in the shipping time because of these -- the opportunities which are coming up. And right now, we see a very good market over here. In regards to your questions for the Property division and for the -- we are doing well in a City Center as well as we are doing all our commercial outlet or this increase is not there only just because of City Center, no. Even in the -- when we go to our other Aamal Real Estate segment, there also we have done a good increase even on commercial units as well as in that residential units, yes, there was no big high. But yes, we have good occupancy rate because of our properties and the services that we are providing. So our proper -- currently, like most of our properties are leased out. Of the residential property, I can say above 95% already leased out, even commercial units also at Aamal Real Estate also, that is also, I would say, it's always above 93%, 94%. It's there. There's a movement is there. But whatever we have done in the year 2023, yes, there was an increase even in the revenue part, not only because of this, but because of the -- at the time of renewal, we were able to make some money around of this.