Barwa Real Estate Company Q.P.S.C. (BRES) Earnings Call Transcript & Summary

Hello, and welcome to the Barwa Real Estate Conference Call. I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Roy Thomas to begin the conference. Roy, over to you.

Thanks, Kevin. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Barwa Real Estate Company's First Quarter 2023 Financial Results Conference Call. On this call from Barwa Real Estate, we have Tamer Elsayed, the Group Chief Financial Officer; Tariq Al Jaber, the Investment Management Director; Dr. Abdulla Al Kaabi, Director of Development; Mohamad Daakour, the Budget and Planning controller; and Abdulla Khalfan, the Financial Controller. We will conduct this conference call with management first reviewing the company's results followed by Q&A. I will turn the call now over to Tamer Elsayed. Go ahead, Tamer.

Thank you. [Foreign Language]. Welcome, everybody, on behalf of myself and all other speakers today. We wish you all a very warm welcome to Barwa Real Estate Q1 post results conference call. I'm Tamer Elsayed, the Group Chief Financial Officer of Barwa Real Estate. At the beginning, I would like to thank QNB Financial Services to host this call on behalf of Barwa Real Estate. Please note that except for the historical fact, statements made by the management may contain a projection or other forward-looking statements regarding future events or future financial performance of Barwa Real Estate. These forward-looking statements are not guarantees or promises of future performance. Barwa undertakes no obligation to update or revise any forward-looking statements contained herein, whether as a result of new information, future events or otherwise. Barwa Real Estate declared the Q1 2023 financial statements on 12th of April 2023, and the investor presentation is available on Qatar Stock Exchange website as well as on Barwa Real Estate website in the Investor Relations section. Please let me start by giving you a brief introduction on Barwa Real Estate. We are 1 of the leading real estate developers in Qatar with expertise in developing, leasing and managing real estate assets. We have about 5.5 million square meters built-up area under operation, which consists of residential projects, labor rooms, warehouses, retail showrooms and offices. As of end of March 2023, we have operating units of 14,069 residential units and around 55,000 labor rooms in addition to commercial offices, hospitality and other operating portfolio components, which are detailed in our Investor Relations presentation. Approximately 86% of our total operating revenue and about 97% of our operating profits are generated through these assets. Furthermore, Barwa has a land bank approximately 5.5 million square meters, of which 5.4 million square meters within Qatar. Of this, we own approximately 4.4 million square meters, while the rest is leased. Looking forward, Barwa plans to selectively monetize these land bank by selling or developing properties based on prevailing market demand. Now I would like to highlight some key points on the performance of the company for the first quarter 2023. To begin with, our total operating profit stood at QAR 533 million as against QAR 503 million for Q1 2022. Our total operating profit came in at QAR 392 million, against QAR 336 million in Q1 2022. Our profit attributable to the equity holders of the parent for Q1 2023 stood at QAR 235 million as against QAR 229 million in Q1 2022. On the balance sheet side, our financial position remains strong with the net debt balance of QAR 15.9 billion and the net debt to equity at 0.76. We have adequate liquidity and balance sheet strength to pursue our growth agenda. Also, we keep working on refinancing part of our facilities to enhance our liquidity ratios and the cash flow projection. With this, we can start the question-and-answer session. Again, thank you for joining the call, and we will be happy to answer any questions that you may have. I now hand over to the moderator at QNB Financial Service to field any questions. Thank you.

[Operator Instructions] And your first question comes from the line of Zohaib Pervez of Al Rayan Investment.

Thank you, gentlemen, for the presentation. I've got 2 questions. Firstly, could you tell me the rationale for the decline in operating expenses, they have declined significantly year-over-year. So if you could let me know that first? And secondly, how is the leasing progression going on for your 2 projects, the 2 Wakra projects, because I think this would be the quarter when the -- you have to now go into the market and lease them. So if you could tell us -- give some update on those 2 projects?

Regarding the decrease in operating expenses, in Q1 2022, we still had the quarantine projects with the Qatar Discovery, where we were providing many services in addition to the lease of villas. So the operating expense was high at that time. For 2023, we don't have any more quarantine. And we still -- we started to have the operation of the new -- 2 new projects, Wakra projects with the Supreme Committee releasing was finished in February 2023. So we had same revenue, almost, but the operating expense was much less because the profit margin for these projects is much higher than the labor accommodation or the Qatar Discovery deal.

Yes. On the other question, we just took over the 2 assets in March, and we are actually now in contact with various corporate -- various companies for corporate leasing. And we are also actively marketing the 2 properties for the public. So it's picking up, but it's still -- were just 1 month after the handover from the Supreme Committee.

[Operator Instructions] And your next question comes from [ Alif Muhammad Avil ] from AFI Group.

So I have a question on the receivables. Is there like a time line agreed on with the government for the receivables repayment?

What do you mean by government? What do you mean by...

Sorry?

What do you mean by receivable from government? Can you give...

I mean you have QAR 1.5 billion receivables, and last quarter, I was asking about it. So there was some of it related to I think the World Cup. So I think that the receivable is still the same. So this is my question.

Big portion around 50% of the receivables is mainly coming from the accounting treatment for the School PPP Package I, which we won with Ashghal. So around QAR 800 million. So that's a big portion of the amount. It's on the accounting treatment being recorded as the contract assets under receivables. The other portion is due from different tenants from the market, not necessarily the government. And we are working all the time and we are working to improve the collection and to improve our collection status.

Okay. Got you. Okay. Thank you for the clarification.

[Operator Instructions] And there are no further questions at this time. So I'd like to hand back to Roy Thomas.

All right. There are no further questions. We would like to thank Barwa Real Estate Company's management for the results update and answering all the queries and look forward to speaking to you all for the next quarter results. Thank you.

Thank you.

Thanks, everybody, for that. Thank you.

That does conclude our conference for today. Thank you for participating. You may now all disconnect.