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 2024 9 Months Financial Results Investors Call. On this call, we have Mr. Mohammad Arif, the Accounts Manager of Aamal Company; and Mr. Zaid Shelleh, the Investor Relations Manager of Aamal Company. We will conduct this call with first, Mr. Zaid presenting the company's results on behalf of the management in English, and an Arabic report will follow subsequently. And a Q&A session will be answered by Mr. Arif and Mr. Zaid. Mr. Zaid, please proceed. Mr. Zaid, please proceed.

Yes, I'm sorry. Thank you, Laura for the introduction. I'm sorry, I was muted. I didn't realize that, so my apologies to everyone. Okay. Good afternoon, everyone, and welcome to this presentation of Aamal Company results for the 9 months ended 30 September 2024. My name is Zaid Shelleh, Investor Relations Manager at Aamal, and I will be delivering this presentation along with Aamal Accounts Manager, Mr. Mohammad Arif, who will be also available to answer your questions in a few minutes' time. Accompanying this call is a short presentation, 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 a strong resilience performance over the first 9 months of 2024, with revenue and net profit increasing by 3.2% and 14.6% year-on-year, respectively. Our Industrial Manufacturing, Property and Managed Services segments all performed well, recording a robust net profit growth. Trading and Distribution reported increased revenue but small decline in net profit due to delayed product deliveries and contract renewals at Aamal Medical. These results are a testimony to the recent strategic initiatives Aamal has successfully undertaken as well as our ongoing ability to capture new opportunities and maintain our competitive positioning across many diversified sectors. Highlights for the period include Senyar Industries' continued involvement with Kahramaa project, the recognition of Doha Cables as major Qatari exporter and the benefits arising from recent acquisition of Maintenance Management Solutions, MMS. The outlook for Aamal remains positive with continued growth potentials being driven by expanded market reach, the acquisition of complementary businesses and strategic initiatives to enhance, of course, our core operations. In addition, Qatar's economic growth prospects, combined with the numerous opportunities created by the Qatar National Vision 2030 provides further optimism. The financial results set out in Slide 4 underline Aamal's strong first 9 months results of 2024. The Industrial Manufacturing segment performed well with good performance by Aamal Readymix and Senyar, leading to a net profit growth despite decline in overall revenue resulting from the completion of Aamal Cables contract. Our Property segment also performed impressively with high occupancy rates maintained and upward reversion of lease these agreements, while Managed Services continue to benefit from the acquisition of MMS. Although delays to contract renewals and deliveries were seen at Aamal Medical, Ebn Sina achieved higher sales in the period. We are also pleased to report the continuing strengthening of our balance sheet, which remains underpinned by disciplined cost control -- well, and at the end of September, gearing stood at 0.74%. Turning to each of our segments. Our Industrial Manufacturing segment show a 57.7% decline in revenue year-on-year following the completion of Aamal Cables contract, as we mentioned before. However, strong performances across the rest of the segment continues to robust net profit growth of 193%, up to QAR 5.5 million following the QAR 5.9 million loss recorded at the end of quarter 3 of 2023. This net profit growth can be attributed to strong performances throughout the segment. Both Aamal Readymix and Aamal Cement recorded improved profitability, while Senyar also saw robust net profit growth, driven by higher revenues related to Kahramaa project. Ci-San benefited from the higher shipping and the sale of Um El Hanaya. During the period, Doha Cables were also recognized as a major exporter by the Qatar Development Bank, further demonstrating the leading positioning of Aamal's subsidiary businesses. The outlook for the Industrial Manufacturing remains positive, supported by the existence of major infrastructure projects and the segment's expanded market reach. And we are evaluating opportunities such as the potential full acquisition of Advanced Pipes and Casts Company. Turning to Slide 7. Trading and Distribution delivered a mixed set of results for the period, recording a 5.8% decline in net profit year-on-year despite the 17.3% increase in year-on-year revenue. The decline in net profit was mostly attributable to delay in deliveries and the renewal of service contracts at Aamal Medical, as we mentioned before, leading to a reduction [indiscernible] and net profit for the business. Elsewhere, Ebn Sina Medical performed very strongly, driving the increase in revenue for the segment. This was largely due to increased sales and net profit stemming from organic growth and increased commission income. Aamal Trading and Distribution also performed well, utilizing regular sellout tire promotions and price increases on renewal service contracts to continue its growth momentum. Moving to Slide 8 and the performance of our Property segment. Pleasingly, revenue and net profit in the Property segment increased by 5.2% and 5.9% year-on-year, respectively with positive performances across City Center, Aamal Real Estate and ECE. City Center Doha saw revenue increases due to signing of new tenants and increased leasing agreements. The completion of accessibility improvements linking the DECC metro station also further enhanced City Center's shopping experience and leading market position. Aamal Real Estate maintained stable occupancy rates, above 90% following previous investment in refurbishment and upgrading of its properties. Turning to Slide 9 and our fourth segment, Managed Services. This segment saw net profit increase of 62.8% year-on-year to reach QAR 12.5 million along with 91.7% increase in year-on-year revenue to reach QAR 121 million. This was driven primarily by the ongoing growth momentum at Aamal Services, which continued to win new contracts in Q3 2024. The addition of Maintenance Management Solution contributed to year-on-year net profit and increases for the segment and promises to continue being a growth driver. Finally, Family Entertainment Center also benefited from higher footfall related to its effective marketing campaigns and the facility improvements as well as the 2 Eid breaks which fell in the period. To conclude, Aamal positive performance in the period highlights the ongoing strength of the company's diversified business model and strategic initiatives, creating a strong basis for which to continuing driving growth. Aamal subsidiary companies remain partner of choice, occupying competitive position within several markets and economic sectors with ample opportunities to expand market reach, both in Qatar and internationally. Looking ahead, the outlook remain positive with Qatar's strong economic growth forecast and the National Vision 2030, both promising to provide continued business opportunities, supporting Aamal's ongoing focus on creating long-term shareholder value. This conclude our presentation, and we will welcome any questions you may have after we finish the presentation in Arabic. [Foreign Language] Please, Mr. Arif and Laura, you can start with the Q&A session.

Thank you, Mr. Zaid. Thank you, everyone, for listening. [Operator Instructions] Anyone has any questions, Mr. Arif and Mr. Zaid would be happy to answer. Yes, please, Mr. Zohaib.

I've got a question on the occupancy for City Center. Could you tell us what is the current occupancy for City Center and the GLA? And how much of the GLA has increased year-to-date?

Thank you, Mr. Zohaib, for your question. See, currently, our occupancy rate is well above 89%.

Arif, Your voice is -- I'm sorry, he's right. Thank you. Arif, your voice is very low. Can you please get closer to the microphone?

All right. Can you hear me now?

Oh, it's perfect. Thank you.

Zohaib, our current occupancy rate is well above 89%. And we did the -- leasable area is getting increased year-on-year. Now this year also, we have increased our leasable area, the main Arabic portfolio, which is there, yes.

Could you tell us like in percentage terms, how much has the GLA increased by like 5% year-to-date? Or...

It will be above 4%.

Above 4%. And have...

And to our plan -- we still have a plan to grow it further. We are having -- as we discussed, we still have bigger plans on this to -- with our [ increases ].

To improve it further. And the rental rates in the property are also for City Center have also gone up when renewals have come up?

The renewals has come up. Yes, it is marginally, not aggressively but very marginally because looking at the market trend, we don't want to lose our tenants and we are retaining them. And we are facilitating more and plus we are focusing on our preventive maintenance for that.

I have a question. Aashish Agarwal here from The First Investor. So just a quick question. You mentioned that your margins at Aamal Readymix has increased the revenues and the margins. So just wanted to know what are the drivers behind this? Just -- that's it.

Only major, I would answer you in one word, cement cost reduced.

Okay. If there are no further question, thank you, everyone, for joining us today.

Sorry, I do have a follow-up question.

Yes. Yes, go ahead.

To your comment right now that the cement cost have reduced. So you're saying that the cement cost from the 2 producers in Qatar are now lower, the cement prices have come down?

No, no, rebate from the government.

So rebate from the government. So Aamal Readymix has...

[indiscernible] Yes.

Aamal Readymix got a rebate from government for a particular project or on...

From the suppliers also, on projects.

Sorry, could you repeat that?

Yes, from suppliers also, it is on the projects. We are doing [ 1 Kahramaa ] project. We are doing other projects up there [indiscernible].

So the government gave Aamal Readymix subsidy on the cost of cement for certain projects?

Yes.

That's my understanding. Okay. Any idea on how much is the subsidy per ton of cement?

I don't know, Zohaib, this one, but how much is there. But yes, it has reduced.

Thank you, Mr. Zohaib, for your input. Are there any other questions?

I'm good.

Thank you, everyone, for joining us today. This concludes today's conference call. You may now disconnect. Have a good day.