Ezdan Holding Group Q.P.S.C. (ERES) Earnings Call Transcript & Summary

Thank you for standing by. My name is Angela, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ezdan conference call. [Operator Instructions]. I would now like to turn the call over to Phibion Makuwerere. Please go ahead.

Thank you, Angela. Good afternoon, and welcome to Ezdan's Second Quarter and Half Year 2024 Earnings Conference Call. On today's call, we have Ezdan's management team. We've got Tamer Fouad, who is the Group Chief Financial Officer; and we've got Taha Moursi, who is the Financial Controller and IR Officer. And as usual, they will first go over the performance. And as Angela suggested, then we'll have a Q&A session immediately afterwards. I will now turn over the call to Tamer to begin. Over to you sir. Please go ahead.

Thanks, Phibion. Good afternoon, everyone. As a beginning, thank you for joining us today in Ezdan's conference call to discuss the financial performance and financial position of Ezdan Holding Group for first half 2024. We have made available the investor presentation for this conference call on our company website, www.ezdanholding.qa, which can be found under Investor Relations section. Before proceeding, we would like to provide a disclaimer that some of the information that will be discussed here might contain projections or other forward-looking statements regarding future events or future financial performance of Ezdan Holding Group. Any forward-looking statements included here speaks only for when it is made. Ezdan undertakes no obligation to publicly update or publicly revise any forward-looking statements whether because of new information, future events, or otherwise. Today's conference call will include 3 sections. The first section will be comparing the financial performance of first half '24 compared to first half '23. The second section will be about financial position of 30 June '24 compared to 31 December '23. And the third one will be a brief of the cash flow statement in first half '24 compared to first half '23. First part, which is related to the financial performance. Ezdan achieved a net profit to its owners of around QAR 177 million compared to QAR 161 million. The profit or loss statement contains many changes in the following factors. Finance costs decreased by around QAR 64 million. Rental income and other operating revenue decreased by around QAR 51 million. Operating expenses decreased by around QAR 18 million. The group incurred loss in ForEx by around QAR 5 million compared to a gain of QAR 9 million. General and admin expenses decreased by around QAR 12 million. The main ratios of financial performance were as follows: Operating gross margin was 82% compared to 81%. Net profit margin was 19% compared to 17%. In terms of the components of profit or loss statement, Ezdan recognized a rental income of QAR 866 million compared to QAR 916 million, with a decrease of around QAR 50 million, representing around 5%. The decrease in rental revenue was mainly attributed to decrease of QAR 68 million for Residential segment was around 9%. On the other hand, the Hotel segment increased by around QAR 16 million, representing 21%, and Malls segments increased by QAR 2 million representing around 6%. The main statistic for Residential segment was average occupancy rate of around 90% compared to 87%, with an average revenue per unit was around QAR 4,400 compared to QAR 5,100, and total units available for rent of around 31,600 compared to 30,400. The main statistics of Hotel segment was average occupancy rate of around 78% compared to 64% with an average daily rate of QAR 194 compared to QAR 190. The main statistic of Malls segment was average occupancy rate in Malls was around 91% compared to 90%. Considering operating expenses. Operating expenses have decreased of around QAR 18 million from QAR 184 million in '23 compared to QAR 166 million in '24, which means it decreased by around 10%. On component basis, the decrease was mainly in utility charges by QAR 11 million and sewage charges by around QAR 8 million. On segmental basis, the decrease was mainly in Residential segment of around QAR 18 million. . Operating profit from main operations was around QAR 745 million compared to QAR 779 million, with a decrease of QAR 34 million, representing down 4%. On segmental basis, operating profit for Residential segment was around QAR 633 million compared to QAR 687 million with a gross margin of 84% compared to 83%. Operating profit from Hotel segment was QAR 73 million compared to QAR 58 million, with a gross margin of 67% compared to 64%. Operating profit from Malls segment was around QAR 39 million compared to QAR 34 million with a gross margin of 78% compared to 70%. General and admin expenses have decreased by around QAR 12 million from QAR 58 million to QAR 46 million, representing around 20%. The decrease was mainly due to a decrease in professional and legal expenses. Legal feel [indiscernible] by around [ QAR 16 million ], while combined increase in other categories by around QAR 4 million. Regarding finance cost, it decreased by around QAR 64 million from QAR 572 million to QAR 508 million, representing 11%. Now we will move to the second part, which is related to the financial position. As of 30 June '24, the group has total assets of around QAR 47 billion with no material changes. Cash and bank balances was QAR 246 million compared to QAR 372 million, with a decrease of around QAR 126 million, representing 54%, which mainly utilized for settlement of liabilities. Investment in properties of around QAR 46 billion, which has slightly increased by around QAR 40 million, representing mainly additions and capitalized expenditures during the period. The total liabilities were QAR 13.2 billion compared to QAR 13.5 billion, with a decrease of around QAR 0.3 billion, representing 2%. Trade and other payables have decreased by around QAR 515 million. Due to related parties has decreased by around QAR 216 million. Islamic borrowings has increased by around QAR 456 million. That increase resulted mainly because of obtaining the new facility amounting to QAR 657 million. Financial cost of around QAR 410 million and repayment of around QAR 630 million during the period. Total equity, including noncontrolling interest, was around QAR 33.5 billion compared to QAR 33.4 billion. The share capital of Ezdan is QAR 26.5 billion. Retained earnings have increased by QAR 177 million, which represents net profit for the first half 2024. Regarding the third part of this conference call, it is related to the cash flow statement. Net cash flows from operating activities were QAR 652 million compared to QAR 724 million. Net cash flows used in investing activities were QAR 55 million compared to QAR 40 million, and net cash flows used in financing activities was QAR 745 million compared to QAR 677 million. Thank you. Operator, you can start the Q&A session.

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

So could you repeat the occupancy levels across your different segments, the Hotel, Residential and Malls. Also, I think you mentioned that your rental rates have -- I could not understand, has it gone down or they have come up from, I think, QAR 4,800 to QAR 5,100 something? So could you give us more information on that?

Thank you, Zohaib. Regarding occupancy rate, Residential segment around 90%, Hotels is 74%, and Malls 91%. Regarding the rate, it has decreased from '23 to '24.

Sorry, what has decreased from '23 to '24?

The decrease was in rental rate. We are talking about average in '23 was around QAR 5,100; and in '24, QAR 4,600. Here I'm talking about the rate, not about the revenue [indiscernible].

So the rental rates declined from QAR 5,100 per month to QAR 4,600?

Exactly.

Okay. And this decline is because you have more supply? Or is it because there is competition in the market? So why do you think there is a decline? Why do you think there was this decline from QAR 5,100 to QAR 4,600?

Because when we are talking about the rates, we are talking about the rates during the 6 months -- the average of 6 months. The average of 6 months in '23 was impacted by the rates coming from [indiscernible] COP 22. So the rates, the average was high, but in '24, it was not affected. That's the main reason.

Okay. And your still total units available is 30,500?

Exactly. Now we are -- starting in '23, it was the average units available for rent it is 31,400. It increased gradually. Now we are talking about 33,000 units available for rent, and it is totally injected in the market. So now there is no [indiscernible].

Now your total units available are 33,500?

Exactly. And now all of them is available in the market.

All of them are available. Okay. And when did this new 3,000 units were launched?

It was at the beginning of this year.

Beginning of this year.

[Operator Instructions] There are no further questions. I will now turn the conference back over to Phibion Makuwerere. Please go ahead.

Thank you, Angela. If we no longer have questions on the line, then it brings us to the end of our call. Thank you all for joining us this afternoon for Ezdan's call. I also want to thank the management team for taking the time to update the market. Please do join us for the third quarter conference call. And good afternoon to you all.

Thank you.

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