Estithmar Holding Q.P.S.C. (IGRD) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. This is Zeina Fares from EFG Hermes Research speaking, and I'd like to welcome you all to Estithmar Holdings 2Q '26 Results Conference Call. With us on the line today, we have Mr. Basel Shaddad, Holding CEO; Mr. Rashid Sheikh, Holding CFO; and Mr. Ishan Gitai, Holding Investment Director. Without further delay, I'd like to hand over the call to management.

Hello, and thank you, everyone. First of all, we're delighted to have you here on our investors call for reviewing and presenting the first half 2026 financial results. A quick introduction [indiscernible] the holding CFO of the group. Along with me, who will be presenting today is Mr. Ishan Gitai, who is also helping me during the presentation. What we would like to do for the next maybe half an hour to 1 hour, which is our allotted time is go through our presentation, highlight our business, highlight our financial performance and at the end of the presentation, leave time for some Q&A to be answered by us. And again, now we welcome you to this call. And without continuing this with further ado, I would like to hand it to Ishan to maybe take us through the business section of the presentation.

Thank you, Mr. Rashid. Good afternoon, everyone. Thank you for joining our H1 2026 results. Before we dive into our financial sector, I would like to take you through the -- our Estithmar Holding overview. As a Estithmar Holding, we are a proud Qatar headquartered MNC operating in 10 countries currently. Under our group, we operate with 117 companies so far, segmented under 5 groups. We employ more than 24,000 employees within our organization. The 5 groups represent 5 sectors for us, starting with Healthcare, represented by our brand name Apex Health, providing advanced medical services through global partnerships and advanced technologies. The second business group being Contracting & Industries represented by our brand name of Elegancia Contracting & Industries, providing industrial solutions and integrated contracting services across different domains. Third group being Services, Elegancia Services, which provides comprehensive portfolio of premium integrated services under facility management, catering, manpower services, et cetera. Our fourth group being real estate development group represented by Estithmar Ventures, providing world-class destinations in collaboration with leading international brands. Our fifth and the newest group introduced in 2026 being under financial services represented by Estithmar Capital, which is proposed to provide various financial services under banking, insurance and various other sectors under the financial services domain. Moving forward, a quick deep dive on the 5 groups again to showcase the marquee projects and the companies that belong to these groups, starting with Apex Health, where we operate in 2 major segments wherein the first being the design, build and operate of hospitals. We have 4 projects so far, The View and the KMC in Qatar. HAQA Algerian-Qatari Hospital in Algeria and Baghdad International Hospital. We have 4 O&M projects, which are operate and maintenance, representing the second domain or the second segment of the business, which is asset-light and service-oriented. We have 4 projects, 1 in Qatar, Military Medical City Hospital; 2 in Iraq and 1 in Libya. Our Contracting & Industries is represented by various segments within the group, representing integrated -- providing integrated services to the clients. We have an MEP company, kitchens, data center, ELV, fit-out, water solutions, landscape, steel, joinery, stones, switchgear and an integrated unit in KSA looking after all our Saudi projects where we are trading. Under Services, we have facility management, catering resources, Marine, Gabbro. Estithmar Ventures represented by Al Maha and Lusail Winter Wonderland in Al Maha Island; Katara Hills and Maysan, another 2 resorts in Qatar; 2 upcoming projects, Rixos in Baghdad, Iraq and Rosewood in Maldives. Under Estithmar Capital, we have Shahba Bank, which is our newest addition, and we are currently in process of closing the transition of acquiring this bank in Syria. The companies broadly represent 8 industries where we operate in, which are contracting, manufacturing, real estate, healthcare, hospitality, facility management, marine and financial services. Moving on. For those of you who have recently joined us in our journey as Estithmar, I would like to give a few moments to just explain the journey or the evolution of Estithmar so far. Started in 2022 when Elegancia Group acquired Investment Holding Group through a reverse acquisition transaction and launched 4 sector or clusters in healthcare, service, ventures and contracting industries. Same year, we launched -- 2022 being the FIFA year, very prominent and important year for the entire Qatar economy. We launched 4 multiple projects, including our marquee hospitals, View Hospital, Al Maha Island, Katara Hills, Maysan Resort. On top of that, we delivered more than 100 projects supporting the FIFA. In 2023 being the normalization year -- expected normalization year group took a strategic decision to diversify the businesses across geography outside Qatar. We ventured into the growing market in Saudi and launched Elegancia Arabia. And in the same year, we won 5 MEP projects in Shura Island. Same year, we initiated our works on Rosewood Maldives and HAQA in Algeria. 2024 being a significant year for Apex growth, wherein we signed 2 O&M contracts for Iraq, launched KMC, rebranded Elegancia Healthcare as Apex Health and signed Misrata Hospital in Libya and expanded our operations in MEP businesses as well. 2025, we started with -- we started our Rosewood off-plan sales, signed contracts with Hamad Medical Hospital, signed contracts in Syria, started as part of our -- as part of our cost optimization strategy, we started our back office in Egypt and signed some few MOUs as well. 2026, the group took another significant decision or a strategic decision to expand in financial services sector. We started our process of acquiring Shahba, a commercial bank in Syria, Shahba Bank. And currently, we are in the process of closing the transition. Moving on, showcasing the group's strategic decisions to diversify across outside Qatar. We have already stepped into various geographies and currently operating [indiscernible]. Looking at the right side of this bar chart showcases the revenue split for our group, which clearly showcases the success of this strategy and the plan that the group and the management had taken. Our revenue has diversified out of Qatar from 4 percentage in 2023 to 31 percentage by H1 2026. Just to summarize all the initiatives and the investment highlights, not to repeat myself, but the 5 operating groups where we operate currently, our revenues have increased by 54% in 2025. Net profit increased by 122 percentage. In H1 2026, we have observed a prominent growth in our profitability because of operational optimization strategy. Our EBITDA has grown by 20 percentage. Net profit grew by 21%. Our group as a proud Qatari company, we are completely aligned with the Qatar National Vision of 2030, which is reflected in our business units as well. Our businesses represent healthcare, infrastructure, tourism services and financial services sectors, which are all prominent pillars within the National Vision strategy. We have already expanded ourselves in 10 countries, and we already own and operate various marquee brand projects within Qatar and outside. Now for the financial performance for H1 2026, may I hand it over back to Mr. Rashid.

Thank you so much, Ishan. Thank you. I appreciate it. Yes. So just before I get into the financial sections, I'll just give a high overview of the business. So we have continued to perform very well for the first half of 2026 when I compare it to 2025. Both the P&L has improved. Operating performance has improved across many metrics. In addition, the balance sheet continues to strengthen as we continue to invest in some of our projects to generate future earnings. So on a high-level basis, the financial statements, P&L performance and balance sheet are performing very well and very strong. And if you -- now I will just go into this slide on the screen and talk to you a little bit about the specifics of the P&L. So revenue -- and this is, again, 6 months this year versus 6 months last year, just to put the correct reference in. All these numbers have been reviewed by PwC, and we received a clean opinion on all these financial statements as well. So our revenue is QAR 3.1 billion for the first 6 months of this year, which is 3% over last year same period. Gross profit is approximately QAR 1.1 billion this year, which is a 2% increase over last year. EBITDA has shown a marked increase of about 20% year-over-year ending 2026 first half of QAR 880 million. And this translates also in a very strong positive bottom line, which is QAR 561 million profit for the first 6 months of this year, which is above 21% over last year. Out of this profit of QAR 561 million, QAR 557 million represents the company, just us and QAR 4 million represents noncontrolling interest that others have. I think what is -- back one side, please, Ishan. So what is important on this slide to note is that our EBITDA has increased significantly year-over-year. Our businesses, which will be defined a little bit later on in the presentation, are performing very well. So again, our C&I business is completing many projects, delivering positive growth on EBITDA earnings. Our venture business, which is -- continues to perform very well, which is our real estate business internationally, which we continue to sell properties abroad, which is also performing very strongly and generating positive results. Our service businesses, which relies heavily on government contracts is also performing very well on contracts. And these are high-margin businesses, which are yielding quite good earnings onto the P&L for us. And even our healthcare sector performs on a profitable basis on a year-to-date first 6 months of the year. Just in terms of our earnings per share, it's grown by above 14% year-over-year, which is very positive and ending the first 6 months at QAR 0.124. Next slide, please. In terms of our stock market [indiscernible] year till June 30, the price has increased by about 31%, ending on June 30 at QAR 4.42 per share, which is a remarkable performance and I think a testament to what shareholder believes is future value coming on board. Our market capitalization, which is the table below, from 2022 when it was QAR 6 billion, now it is QAR 20 billion, has a CAGR of 40%, which is, again, remarkable growth, again, allowing investors to see and understand the future prospects of our business and where it's headed. And I think this is why our market cap continues to grow as the share price [indiscernible]. Price-to-earnings ratio on June 30 is 17.3x. What is also interesting to note is our shareholders continue, although they continue to be heavily Qatari-based investors, but there is an increasing amount of foreign investors coming into our books at 7%. And I think this is a positive sign reflecting as we grow a little bit more in the region and outside of Qatar that our investor base is following suit as well. Next slide, please. In terms of the segmental performance of the company and what the various clusters contribute to our revenue and our earnings, Apex and Elegancia Services and Contracting & Industries and Ventures are all performing quite well and all contributing quite in a balanced way to our overall consolidated revenue [indiscernible] more than 40%, which is a positive sign in terms of our earnings -- our revenue diversification. So this is a positive sign. On the earnings profile, it's slightly different, where a magnitude of 51% comes from our healthcare in terms of our earnings, quite heavily skewed towards this area, but it's a high profitable area for us and a growing area. While other areas are growing, including Services, which is at 24%; Ventures, which is our real estate development, which is at 14% of our net profits; and Contracting, which is currently about 11% of my total consolidated profits for the first 6 months of the year. As you see other business coming in line, which includes what Ishan was saying earlier, which is our Estithmar Capital, once that comes in, I think you're going to see a more balancing of our earning profile hit probably in the next 12 to 18 months. And you'll see more a balanced earnings profile as we move forward with new investments coming on board. Next slide, please. In terms of the balance sheet for the first half of the year versus first half of 2025, our assets have grown to QAR 14.7 billion versus end of the year, which is December 31, 2025, of QAR 14.5 billion. So there is -- the assets are remaining steady. There's a small nominal growth through some investments that we've done for the first 6 months of the year. Liabilities has a slightly different story. So the assets have increased by about 2% from the beginning of the year. Liabilities have actually fallen by 4% from the beginning of the year. But what's clearly important to note is the composition of some of our assets have changed -- sorry, our liabilities have changed somewhat. We brought in some more bank borrowings and debt, and that's to fund and finance future projects and funding existing projects, which will generate earnings in the future. But just to give some magnitude, some of our debt that's increased along the way, we've added QAR 1.4 billion of new debt relating to the acquisition of the TVH Hospital. That's about QAR 1.4 billion of debt that's been assumed in the first quarter. We also issued in the first quarter about QAR 105 million of new Sukuk issuances, again, to fund growth. Offsetting these new funding arrangements is a reduction in some of these liabilities, again, relating to the TVH hospital in our healthcare business, which removed assets of about -- sorry, liabilities of QAR 2.1 billion. On a net basis, we're down 4%, which is a positive thing. Equity has grown by about 13% from QAR 4.5 billion to QAR 6.1 billion, reflecting the profits generated for the first 6 months of the year. As mentioned earlier, our property, plant and equipment now stands at QAR 5.4 billion, and that's primarily the asset of the TVH Hospital coming in, in the first 6 months of the year. Return on assets stands at 7.5%, which is an improvement from 6.2% previously. Our current ratio because of some of the changes that have taken place on the liability side has improved from 0.97x at year-end to 1.31x. And our return on equity is now 20.6% versus 18.8% at the end of last year. Next slide, please. The next few chapters is going to be a little bit deeper dive into our business units. We're going to provide an overview of each business to provide a little bit more granularity, and Ishan will take it over from here. Thank you, Ishan.

Thank you, Mr. Rashid. So going deeper on the assets and the business units that we have, Apex Health, starting just to give you a bit more color on the business groups and the magnitude of the businesses that we have. Apex representing our Healthcare segment has already is operating 8 hospitals, managing more than 2,800 beds in 4 countries. We have one JCI-accredited facility and multiple international clinical partnerships. On a revenue segment side, it performed QAR 1.2 billion in first half, generating profits of QAR 293 million. Overall, it represents 33% of our H1 total revenues. Talking about these projects, View Hospital, Korean Medical Center, our Qatar-based hospitals, both operating. Military Medical City Hospital, another Qatar Hospital operating. HAQA or Algerian-Qatari German Hospital in Algeria. This is currently under construction and proposed to start operations by Q2 of 2027 -- by end of Q2 of 2027. Moving on to Contracting & Industries arm. Again, we employ more than 12,000 people in the business group with operating in 10 countries, managing more than -- we have currently more than 120,000 square meter of factory areas, delivering more than 1,250 specialized projects. On the backlog side, we already have secured backlog of QAR 4.2 billion, out of which QAR 2 billion to be delivered, half of it to be delivered in the next 12 months. We have a probability adjusted pipeline of another QAR 4 billion. So the prospects of Elegancia Contracting are pretty bright for us. On a revenue side, it is QAR 1.2 billion in the first half, generating profit of QAR 65 million, representing 36% of our total H1 '26 revenues. Some of our key projects in Saudi. CME Wakra, Rosewood Amaala, another KSA projects to be completed in 2026. Moving on to the Services division. Services division currently operating in 8 countries, managing more than 15 million square meters of facility management. Our catering business is producing more than 300,000 meals a day. We have more than 95% client retention. On a revenue side, we generated QAR 880 million in the first half, producing QAR 140 million as net profit and representing 24% of our H1 revenues. The key notable companies, facility management, catering businesses. Ventures. Ventures, currently, we have -- we are already operating and managing more than 475 keys. Under pipeline or operating, we have more than 174 units under sales through Rixos in Baghdad. We are providing platform for more than 50 international restaurants through our entertainment zones. We have more than 5.2 million annual visitors in our Al Maha Island. We are currently operating or going to be operating in 3 countries. On a top line basis, it is generating QAR 235 million in H1, generating profit of QAR 82 million, representing 7 percentage of our total revenues. This is a growing segment for us. And in future years, we expect this to increase in the share of our total revenues. Just to give you a brief on the under development projects, Rixos Baghdad, it is already 71% completed and expected to start operations or hotel operations by Q2 of 2027. We have already sold around 48% of our total 174 units with a strong pipeline of sale in the remaining half of the year. On the Rosewood Maldives project, we have already completed 50% of the construction. The project is expected to launch or start operations by end of Q2 2027. Talking about Estithmar Capital, our newest addition -- our newest venture in financial services. We established Estithmar Capital in Q1 of 2026 as our fifth group under Estithmar Holding. We have already started closing the transition of acquiring Shahba Bank, which is a commercial bank in Syria under Masaref Holding, which is a subsidiary of Estithmar Capital. We have more projects and pipelines ahead in Shahba under Estithmar Capital, which you will hear soon in upcoming earnings calls and quarters. On the Governance & Strategy side, we have no changes in our Board, Board of Directors. They stay the same. In the management, we have our new CEO, Mr. Basel Shaddad, who joined us in May 2026 and Mr. Rashid, who just presented you the H1 earnings. Rest of the management stays the same. On the remaining year of 2026, on Healthcare side, we are on track to work with the -- on various pipeline PPP projects and O&M projects, which are under discussions with various governments and other customers and should materialize within -- by early next year or by end of this year. On the Services, we are scaling our third-party FM and contracting projects. Industries & Contracting, we already have a QAR 4 billion of backlog with another QAR 4 billion of pipeline supporting KSA projects. Ventures is set to start 2 of its major developments through Rixos Baghdad and Rosewood Maldives in 2027. Estithmar Capital is built out of Masaref Financial Services platform. It is going to grow beyond our first bank and venture into different segments of financial services, be it insurance, fintech, advisory, et cetera. Thank you so much.

We would like to -- so this is the ending of the formal part of the presentation, but happy to open up the presentation for Q&A, so we can answer any questions you may have.

Now it's time to open up the floor for questions. [Operator Instructions]

And I would appreciate if when questions are being asked if the person who is asking the question can identify themselves, what institution they're from. Just gives us a little bit of context from our side, please.

We have our first raised hand from [indiscernible].

[Foreign Language] Can you hear me?

Yes, we can hear you.

Congratulations on your results. This is [indiscernible] from Al Rayan Investment. So my question is specifically in -- with regards to Apex Healthcare. So my question first is regarding the IPO. So how is that going so far? If you can give us some details regarding that, that would be very helpful. My second question is regarding KMC. If you could tell us about the -- what's happening exactly with the KMC, that would be very helpful.

Thank you very much for your question. In terms of the Apex IPO, it is a very important exercise for us as a group, and we are continuing with that exercise. We are -- the work streams are continuing in all fronts. Clearly, there is a market that we are also carefully watching. And we also want to go and execute this IPO in a manner and in a timeline that makes sense where the market is receptive and it is the best possible timing. So all -- we are still working towards that. It is a goal of ours. However, we're just very conscious in looking at the market very critically in order to make sure that it is a successful execution on our part. So that's in terms of the Apex IPO. I hope that's sufficient for your answer for now. In terms of the KMC, can you just be a little bit more specific on what you would like to ask on KMC?

More specifically on profitability, I think on the last call, it was mentioned that it broke even. So in terms of ramping up, can we expect bottom line to be affected positively?

So KMC Hospital continues to operate normally. There is obviously what's happening is there's a little bit of weakness just happening in the sector itself. But the hospital itself is fully capable of taking on more patients. We are working to optimize the revenues of that hospital in order to maximize our profits on that.

We have questions in the Q&A box. The first is from [indiscernible]. He's asking how has the Iran conflict impacted operations?

Sure. So maybe I will just maybe take this at a high level. So clearly, there have been impacts in the whole region, not just for us, but for all corporates and entities. Everyone is dealing in a different way. I think where we have benefited a little bit better than others is that a significant portion, and you saw on the slide earlier, of our operations is outside the region or the immediate vicinity, I will say. And this has allowed for those operations that are outside of the local area to continue to not be affected by those regional aspects. So that has buffered our earnings and our performance materially. Of course, there are other areas which are a little bit more directly impacted -- which is impacting the whole country, the whole area. But on a net basis, I think we've managed the storm quite nicely. Our results are reflective of that. And we continue to make sure that we keep an eye on the market and make sure we manage the situation in a way that protects our P&L, protects our balance sheet, derisks us as much as possible because we're always very focused on risk mitigation techniques. And so far, our balance sheet and P&L have held true to our strategy.

Perfect. Thank you for that. We have a question from Mohit. He's asking, he's from Lesha Bank. He's asking how much out of the 48% in the off-plan sales of Rixos was completed during the first half of 2026.

Maybe I'll answer this in a different way. So as of today, we have sold -- as of today, which is June 30, 2026, we've sold 91 units out of a potential 174 units that -- and on a very profitable basis, the average margin on that side is between 40% and 50%. So those sales are happening very nicely. Yes, they have slowed down a little bit because of the last quarter, but the profitability continues to remain on those asset sales.