Kuwait Projects Company Holding K.S.C.P. ($KPROJ)

Good afternoon, everyone, and welcome to KIPCO's 1Q 2026 Results Call. This is Ahmed El-Shazly from EFG Hermes, and it's a pleasure to have with us on the call today from KIPCO's management, Mr. Moustapha Chami, Group CFO; and Ms. Eman Al Awadhi, Group SVP, Corporate Communications and IR. I will now hand the call over to Eman to start with the presentation.

Thank you, Ahmed, and good afternoon, everyone. Welcome to our earnings call for the first quarter of 2026. Please note that today's presentation is also available on our website along with financial statements for the period. Moving on to the presentation, please refer to the brief disclaimer on Slide 2. Some of the statements that we'll be making today and information available in the presentation will be forward-looking. Such statements are based on KIPCO's current expectations, predictions and estimates and are subject to risks and uncertainties, which may adversely or otherwise affect the future outcome. They are not a guarantee of future performance, achievement or results. I will now hand over to Moustapha to take you through some of the highlights for the quarter.

Thank you, Eman, and good afternoon, everyone. Let us move to Slide 4, where we cover KIPCO's consolidated financial performance for Q1 2026. KIPCO Group consolidated total revenue decreased 2% to $1.22 billion compared to $1.25 billion reported for Q1 2025. This is primarily due to reduction in investment income and ForEx income, partially offset by an increase in interest income. KIPCO Group reported a net profit of $11.5 million in Q1 2026, representing a 31.4% decrease compared to the net profit reported in Q1 2025. KIPCO's total assets at the consolidated level stood at $46.4 billion at the end of Q1 2026, which is a 3% increase from the $45 billion reported at year-end 2025. We move to Slide 5, which shows the revenue line items for Q1 2026 compared to Q1 2025. Interest income from banking operations saw an increase of 3.7%, reaching $634.4 million compared to $611.6 million in Q1 2025, primarily driven by loan book growth in Burgan Bank Group. Net fee and commission income increased to $71.8 million in Q1 2026 compared to $70 million in Q1 2025. Media and Digital Satellite income declined marginally by 2.9% to $57.9 million. Hospitality and Real Estate income saw a slight decrease of 0.4% to $71.8 million. Income from the Energy sector increased by 0.8% to $50.1 million. The Industrial and Logistics sector income saw a drop of 4.2% to $240 million. Furthermore, the group consolidated financial statements include the effects of hyperinflation in accordance with IAS 29 financial reporting in hyperinflationary economies stemming from our Turkish operations. As a result, the group recorded a net monetary loss of $19.1 million during Q1 2026 compared to a loss of $20.7 million in Q1 2025 due to Burgan Bank's operations in Turkey. For further details, please refer to Note 2.4 of the published interim condensed consolidated financial information for the quarter. Moving on to the financial performance of the group's principal operations. We have on Slide 7, the key performance highlights of our banking operations. We start with Burgan Bank Group's results for Q1 2026. I would like to note that Burgan Bank held its earnings call on May 12, and you can refer to the transcript for more details. Net operating income for Q1 2026 came to $207.8 million, up 10% from $188.5 million reported in Q1 2025. Net profit for Q1 2026 was $16.6 million versus $34.8 million in Q1 2025. The growth in top line was offset by higher operating expenses, which increased by 38% due to the impact of UGB consolidation and continued investment in digital transformation and technology infrastructure. Alongside with the impact of hyperinflation in Turkey. Burgan Bank's loan book went up 2.2% to $16.1 billion, while deposits increased 11.8% to $19.9 billion in Q1 2026 when compared to year-end 2025. The bank reported a strong liquidity coverage of 220% and a net stable funding ratio of 111%, above the regulatory requirements of 80% for both metrics. The NPL ratio stood at 2.7% at the end of Q1 2026 compared to 1.8% for Q1 2025. The bank reported a CET1 ratio of 10.5% and a CAR of 15.9% for Q1 2026. Well above regulatory -- current regulatory requirements of 9.5% and 13%, respectively. In April 2026, Burgan Bank received the approval of Central Bank of Kuwait to increase shareholders' equity by KWD 50 million through a rights issue. The bank is currently seeking the approval of the capital market authority before proceeding with the remainder of the rights issuance process. We move on to Slide 8 to cover JKB's performance in Q1 2026. JKB's total income dropped 23.7% to reach 97 million versus KWD 127.1 million in Q1 2025. The decline in total income is primarily due to the lower commission and ForEx income from Iraq operations. Net profit for Q1 2026 came to $27.5 million, down 24.1% from the $36.2 million reported for Q1 2025. At the end of Q1 2026, JKD's loan book decreased 3.8% to $2.8 billion and deposits decreased 5% to $5 billion from year-end 2025. In Q1 2026, the bank's total assets came to $7.6 billion, down 1.8% from the $7.7 billion reported at year-end 2025. On Slide 9, we can see the performance of SADAFCO. The foodstuff company reported a 2.6% decrease in revenue for Q1 2026 at $196.6 million compared to the $201.9 million for Q1 2025. Operating profit was down 32.4% to $22.4 million compared to $33.1 million for Q1 2025. SADAfCO's net profit decreased 35% to $21.9 million compared to $33.6 million in Q1 2025. Decline in net profit was primarily attributable to the higher raw material cost, fuel price increase and general inflationary trend. SADAFCO continues to dominate the market in its three main product lines, UHT Milk, Tomato Paste and Ice Cream. In Q1 2026, market share remained firm at 50.8% for UHT Milk, 52.1% for Tomato Paste and 30.7% for Ice Cream. United Gulf Holding is featured on Slide 10. UGH incurred a loss of $5.9 million in Q1 2026 compared to a loss of $2.7 million in Q1 2025, representing a drop of 117.2%. Total income dropped from $27 million reported in Q1 '25 to $24.2 million for Q1 2026. Meanwhile, total assets dropped 0.5% to $2.2 billion in Q1 2026 compared to $2.3 billion at the end of '25. Liabilities remained flat at $2 billion in Q1 2026 compared to the end of 2025. On Slide 11, we have the results of United Real Estate Company, URC. Please note that URC has been upgraded to Bursa Kuwait's premier market and held its earnings call on May 12. You can refer to the transcript of that call for more details. Across its key income streams of the business, the company reported a 1.1% increase in rental and hospitality income, offset by a 9% decrease in contracting and service revenue, resulting in a 1.8% drop in total revenue in Q1 2026 to $75.8 million. Operating profit went up 10.8% to reach $22.7 million versus $20.5 million in Q1 2025. URC's net profit posted a decrease of 8.4% in Q1 2026 at $6.8 million versus $7.4 million in Q1 2025. The company's total assets remained stable at the end of Q1 2026 at $2.2 billion compared to year-end 2025. It's worthy to note that in March, URC received a letter from the Kuwait Authority for partnership projects confirming that the company has been awarded the contract for the Seafront project Phase 3 for the amount of KWD 13.13 million in annual fees payable to the Ministry of Finance. This is in consideration of the upgrade development, major maintenance management and operation of the project. I will now hand over to Eman to take you through the rest of our portfolio companies.

Thank you, Moustapha. Moving on to Slide 12. Starting with our Logistics and Power Rental business, JTC, which reported a total revenue of $25.8 million for Q1 2026, 2.3% down from the USD 26.4 million reported for the same period in 2025. The decrease is primarily driven by the reduction in revenue from the port division. Net profit for Q1 2026 reported -- amounted to $5.9 million, 13.5% lower than the reported $6.8 million in Q1 2025. On to the National Petroleum Services company, NAPESCO, our oilfield services provider. NAPESCO's revenue for Q1 2026 grew slightly by 0.5% to reach $48.2 million versus $48 million in Q1 2025. NAPESCO posted a net profit of $14 million for the quarter, 15% up from $12.2 million for the corresponding quarter in 2025. The increase in net profit was primarily driven by increased revenue and improved gross margin. Moving on to the health care sector with Advanced technology company. ATC witnessed a 9.9% decrease in revenue to reach $99.1 million compared to $110 million in Q1 2026. ATC reported a net loss of $12.7 million in Q1 2026 compared to a loss of $8.3 million in Q1 2025. Finally, Slide 13 shows the recent business update of OSN Group, the MENA's integrated streaming platform that brings together OSN+, OSN TV and Anghami. Over the last 2 years, the subscribers of OSN+ and Anghami grew 57% and 44%, respectively. The paid subscribers of OSN+ and Anghami reached 3.6 million with 45 Telco partners and both B2B and B2C distribution. Business consumers in hotels, multi-users and bulk reached 100,000 consumers. OSN's strategic plan for the next 2 years can also be seen on the slide. with three main pillars. The first is platform consolidation by creating a unified stack that merges OSN+, OSNTV and Anghami into a shared infrastructure, billing and content management system. The second pillar is AI enablement, whereby velocity would increase 40% through native AI engineering and customer service. And finally, Resource optimization that would result in a 25% reduction in direct costs. I will now hand over to Ahmed to invite our listeners to raise any questions they may have. Ahmed?

Thank you for the presentation. We will now open the floor for Q&A. [Operator Instructions]. So I think we have no questions at this point. So I'd like to hand the call back to KIPCO's management for any concluding remarks.

Well, if there are no questions, we will look forward to meeting you all over our next call for the earnings call for the first half of the year. Thank you very much, and have a good evening.

Thank you. Have a good day, everyone, and thanks to management for taking the time.