Alijarah Holding (Q.P.S.C.) (NLCS) Earnings Call Transcript & Summary

Hello, and welcome to National Leasing Conference Call. Please note that this call is being recorded. [Operator Instructions] Now I would like to hand the call over to Roy, you may begin.

Thanks, Angela. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to National Leasing Company Alijarah Holding's Fourth Quarter and Year-End 2024 Financial Results Conference Call. On this call from Alijarah Holding, we have Rajasekaran Dushyendrar, Finance Manager; and Mohamad Sleiman, the Account Supervisor. We will conduct this conference call with management first reviewing the company's results followed by Q&A. I will turn the call over to Rajasekaran. Go ahead.

Thanks, Roy. Good afternoon, everyone. Thank you for joining us today. I'm Rajasekaran Dushyendrar, Finance Manager at Alijarah Holding. I'm pleased to be joined by Mr. Mohamad Sleiman, our Accounts Supervisor, who will walk through our performance and financial highlights. Following this presentation, we will open the floor for the questions. Thank you.

Good afternoon, everyone. I will be presenting the performance of National Leasing Holding Company in 2024, then we will compare it with the previous year performance. We will go through the slides and give brief details about Alijarah performance, then we will open the floor for questions. I will start with Alijarah revenue, which increased by 8.28% to reach QAR 65.85 million in 2024 compared to QAR 60.81 million in 2023. Our net profit increased by 11.9% to reach QAR 17.12 million in 2024 compared to QAR 15.4 million in last year. Our earnings per share for 2024 is QAR 0.035 compared to QAR 0.031 in 2023. Moving forward to our financial position. Our total assets increased to QAR 810.43 million compared to QAR 713.61 million in December 2023, which is an increase of 13.57%. Our assets compromised mainly from balance with financial institutions, investment securities, investment properties and inventory properties. Our investment securities has significantly increased to QAR 240.82 million compared to QAR 168.5 million in 2023. And that was due to the new investment in high-yield securities. In addition, our investment property has increased as well from QAR 111.19 million to QAR 129.84 million and that was due mainly to the construction of new warehouses in [ Aba Alkhalil ]. Looking to our profitability. Our net operating income increased from QAR 16.06 million in 2023 to reach QAR 20.53 million in 2024. Our net profit for 2024 is QAR 17.12 million, again, compared to QAR 15.4 million in 2023. Our income has increased as well from QAR 60.81 million in 2023 to reach QAR 65.85 million in 2024 with a significant increase in income from investments from QAR 17.1 million in 2023 to QAR 26.5 million in 2024. Moving to our capital adequacy. The share capital remained unchanged at QAR 494.8 million. The absorption of accumulated losses balances as of December 2022 from legal reserves and the profit of the company achieved in 2024 has led to a return earning balance of QAR 24.4 million in 2024. Most of our deposits with financial institution consists of term deposits with bank at approximately QAR 300 million. With regard to our investment securities, we can notice significant increase from QAR 168.28 million to QAR 240.82 million, as I mentioned earlier. Looking to our income statement, our increase in the total revenue and income and the slight increase in total expense have led to an increase in net operating income of 27.8%. It means from QAR 16.06 million to QAR 20.63 million and to an increase in net profit of 11.19% from QAR 15.4 million to QAR 17.12 million. Looking to our financial position, our current asset has increased from QAR 108.9 million to QAR 359.64 million, and that was due to an increase in investment securities and the term deposits, which are maturing within 2025. Our noncurrent assets has decreased from QAR 604.71 million to QAR 450.79 million, and that was due to the same reason of term deposits matured in 2025, that they were considered as noncurrent as of 31 December 2023. Our liabilities have increased from QAR 76.77 million to QAR 164.60 million that was mainly due to obtaining new Islamic financing to fund the company investment in the expansion. Our equity has increased from QAR 636.84 million in 2023 to QAR 646.27 million in 2024. Our net cash flow used in operating activities is QAR 14.78 million. The net cash flow used in investing activities is QAR 33.13 million and net cash generated from financing activities is QAR 66.56 million. That's the performance of Alijarah in 2024. The company focused mainly on investment in Sukuk with high yield and on local and international property expansion. We hope that our performance for the coming year will be as good as 2024 and even much better. Now we will open the floor for questions. Please let us know, we'll be happy to answer.

[Operator Instructions] And your first question comes from the line of Anastasios Dalgiannakis with Al Faisal Investments.

I just have a question to understand, if possible, the outlook and the rationale of the company staying listed. So you have, as you mentioned, QAR 646 million of equity, now your equity is valued at QAR 386 million in the market. And instead of buying your shares back, you deploy them -- you deploy your capital at return of equity of 2.6%. So can you explain a little bit what is the economic rationale of not buying back the shares? What is the economic rationale of staying listed at the moment given the company is an asset manager?

Thank you so much for your question. What we are looking into it, the buying back of the shares, okay, which will be discussed in the management, and we have been presented to the Board as well. But at the present time, we know that Alijarah is hoping to grow in a couple of years, like if we take, the project has started already in Jeddah, Saudi Arabia, and we're expecting for it. And as per the limitations and the regulations from the QFMA and Ministry, what we think is to keep this strategy of buying back the shares after a couple of years, where we will improve our revenue target of QAR 25 million to QAR 30 million in a couple of years, then we can able to go for it where the value of the shares will be at a reasonable rate. That's what we are thinking. This is our strategy. And based on that, we'll be doing it. We know that our value is undervalued, and I agree with your point that our shares is really undervalued and at this point, we already discussed with our management and the management is looking into it. And once the project is kicked off in Jeddah, we will be thinking of this. Thanks for the question. I hope I answered your question.

It does to an extent. In terms of the return on equity, absent the buyback, is there any way you can distribute equity to reduce your equity position because at the moment, you are generating year-after-year a return, which is very low.

Yes, I agree with you with the return on equity is low because the strategy, the market -- we are not diverting aggressively into the market and we want to be very secure investments we are looking for. So our management is taking step by step to take actions, which diversified portfolio. And if you see the deposit rate has started decreasing in 2024 end of the year. So our management is looking for various opportunities to divest the portfolio. That's what we have invested in Sukuk and other investments. And by gradually, I think, as you will agree that rationally behind this is we cannot increase the profit all in 1 year. So we will be gradually increasing it, and we hope [Foreign Language] everything will be -- in upcoming years, it will be increased. The return on equity will be increased gradually in the upcoming years.

[Operator Instructions]. There are no further questions. I would now like to turn the call back over to the speakers for any closing remarks.

If there are no further questions, we'd like to thank Alijarah Holding's management for the results update and answering the query. And we look forward to speaking to you all for the first quarter 2025 financial conference call. Thank you.

Thank you, Roy.

That concludes today's conference call. Thank you all for joining. You may now disconnect.