Nebras Energy Q.P.S.C. (QEWS) Earnings Call Transcript & Summary

Good day, and welcome to the Qatar Electricity & Water Company Quarter 3 2021 Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Bobby Sarkar, Head of Research. Please go ahead, sir.

Thank you, operator. Thank you. Hello, everyone. This is Bobby Sarkar, Head of Research at QNB Financial Services. I wanted to welcome everyone to Qatar Electricity & Water Company's third quarter and 9 months 2021 results conference call. On this call, we have Narayana Rao, who is the acting finance manager at QEWC. We have Gojy Augustine, who is the Head of Management accounts, and we have Abdulla Al-Janahi, who is the cost and budget controller. So we will conduct this conference with management first reviewing the company's results followed by QA. I would like to turn the call over now to Narayana. Narayana, please go ahead.

Yes. Thank you. Welcome to all the investors to this investor call. Third quarter, as you know, QEWC performed well. I can say in the third quarter during last 9 months performance is excellent. We had a very good profit that is around QAR 1.176 billion against QAR 1.034 billion in the last year financial period. In terms of EPS earnings per share, it's QAR 1.087 against QAR 0.94 during the same period in last year. You can see a slight dip in revenue, it is QAR only 1.84 billion versus QAE 1.95 billion. It is, of course, even though a slight dip in revenue, the profit has been resulted in a 14% increase. The dip in revenue mainly due to some decrease in the demand from the Kahramaa and few of the clients for the RAF A3. We had a good performance showing operating profit 12% increase, net profit attributable to shareholders results of 14% increase. Net cash flow from operations almost 22% increase. If you look into the balance sheet, you can see that -- and looking at -- talking about the shareholders fund net worth [indiscernible] of September 30, 2021 against as of December 31, 2020. Hedge reserve that is mainly the resource momentarily, what you say, interest rate hedging of our [indiscernible] mainly comes there. It has gone up by QAR 0.6 billion means negative figure has come down by QAR 0.6 billion. Higher value reserve against the equity investments are earlier we used to call it as available for sale investments. It has come down by QAR 0.5 billion -- sorry, it has gone up by QAR 0.5 billion total. This movement itself is 0.6 plus 0.5 is 1.1 billion. The total movement in the assets -- total assets, it is QAR 9.86 billion, has become QAR 11.3 billion, it is QAR 1.5 billion. Movement in all other assets put together, It is only QAR 0.4 billion. Out of that, QAR 0.5 billion has come from retail earnings and all others is minus QAR 0.1 billion. This retained earnings, it is very much explained by the net profit during the 6 -- 9 months, minus during the [ end ] of the year this figure, it is around QAR 0.5 billion. I think I explained all movement in shareholders' funds, which is used for deciding on the company's future. Due to the other side assets also gone up with the almost same figure, liabilities remained constant. Even the movement is there, net movement is almost close to, I can say, close to [ 0 ] billion. And assets are concerned, mainly, here also, you can see QAR 0.7 billion, more movement in the investments in the [indiscernible] out of 0.6 billion on fair value of the interest rate CAGR, which is reflected in the shareholders consent, as I explained earlier. And equity engagement in fair value is what's listed shares in the Qatar exchange has gone up by QAR 0.5 billion, which is -- it has been reflected in shareholders consent, as I explained earlier. And all other movements is just, I think, I'm telling you about noncurrent asset of course. Only QAR 0.1 billion million in all our assets together except these 2. These also [ is part ] of our shareholders consent from some other side, it is reflected in assets. Cash movement is around point QAR 0.6 billion, all other assets QAR 0.1 billion in non-current asset side. Total movement in assets is QAR 1.6 billion, which is almost equivalent to the total movement in shareholders' funds. Liabilities is almost same. With this, it is clear that company is moving really in the positive direction with the increase in the net worth almost more than QAR 1.5 billion as of 31st December, 2020. So Others, I'm not going to explain much, mainly cost of sales has gone up by, I think, QAR 140 million. It is mainly because of the gas costs have gone up QAR 130 million. Sorry, it has come down by QAR 140 billion, mainly gas costs come down by QAR 130 million, major reason. General and Administrative expenses have come down by QAR 14 million, mainly depreciation has come down by QAR 7 million and sales costs also come down by QAR 5 million. That was the major reason of decrease in G&A. Other operations, of course other operating income has come down by around QAR 40 million, which is mainly because of reversal of [ first hand ] provision of QAR 33 million and interest and ForEx saving of QAR 35 million, which is added up to QAR 40 million. That's the major reason for other operating income, increase in operating -- other operating income. I think overall, as explained, the total structure of the company, during the last 9 months. I think it looks we can just look into any questions or anything our investors has to ask as you know, we try to clarify, either me or Mr. Gojy or Mr. Abdulla will be happy to answer your queries. Our presentation, of course, gives the detailed explanation for most update, things which I related now. If you look into the total value of the company today, it is QAR 18.62 billion, market capital -- capitalization as of 30th September and share price for share of Qatar [ L1 ] is around 16.93. It is an excellent performance in provision with the Qatari market or even any of the Middle East or MENA region. I think we can move to questions.

Yes, Bobby, I think you can take.

Operator, we can open up for questions now, please.

[Operator Instructions] We'll take our first question for the day. Please go ahead, Sultan Saeed.

My question is regarding, is there any major projects that are ongoing that you are capturing gains from or is it only Siraj project? I know that it is ongoing now. Are there any other projects that are ongoing? And then my other question is regarding Nebras. We see that there is a lot of new projects for Nebras Power Company, which is a subsidiary of Qatar Electricity Company. Is there any major projects that are in the pipeline or can you give us any indications on that?

About your first question, Slide #8 explains the recent scenario. We already commissioned model for our company expansion project and the commission.

You have the presentation?

Yes, yes. Of course, I think, how can I...

No, if you could send your email, we will forward you in case we did not send you.

I can see on the website.

Yes, how can I...

E-mail, if you have e-mail ID, just to them or any of QEWC email, we will send it. I will send it in e-mail.

Thank you, Gojy, for informing that. And then, of course, in the -- once you get that, you can see the Slide #8, explains the -- actually answer to your question. We have got -- we had Umm Al Houl Power company expansion project under [indiscernible] completely in like Q1 and solar power project, it is known as Siraj Energy under which Siraj Energy having 49% shareholding. That company executes at and it is still under development and we expect it to be completed in quarter 1 2022. And we have got roughly RAF A development project or Facility E, we call it. And this project still under what you say, tendering stage and it is of course a big project with 2,600 megawatts of power and 100 MIGD of water capacity where QEWC will be having 55% share. It will be probably in --- a new company will be formed for execution of this project in the early 2022. And regarding second project about Nebras, the question is about Nebras, right? Nebras is concerned, of course we have already got so many projects with the effective capacity of 2,041 megawatts of power and so many companies, of course, they have looking to be the whole world wherever they get good projects, they will be interested to invest there. And I think Gojy can explain better than me on this question.

Yes, I think Nebras is currently looking at many projects in Bangladesh, Ukraine, and some other newer countries also they are looking into, but many of them are slightly affected by the COVID impact, but now recovering and we expect some of the deals will be closed in -- I mean, Q4 2021.

I think once I get the presentation, it will be more [ open ].

[Operator Instructions] I believe there is no questions in line. I'll hand the call over back to you.

This is Bobby, again. I would like to ask a question, if I can. This -- I just wanted to get a little more details on the Siraj project. You said that it's going to be completed by the first quarter of next year. What -- like -- what capacity, what percentage of capacity you expect to be online by early next year? And then what's roughly the CapEx that's been spent so far on this project and what's remaining? And how much will be the total CapEx for both the phases?

It is actually 800 megawatt projects, Siraj one. And 800 megawatt will be completed before April 1, 2022 after my knowledge, and Gojy, you can correct me. And partly, it will be commissioned by the end of December, close to 400 megawatts, if I'm right, right Gojy?

Yes. Maybe there may be a slight delay, but by Q4 2022, both will be -- actually, the first phase is 450 megawatts. And the second one is 350. The first phase is most likely in January, early January, and the second phase by April 2022.

And how much has been spent on the project so far and what's remaining?

That figure, I'm not having. Gojy, you have got the figure?

Actually, it's at the JV company level, actually. We don't know exact figure.

Yes, the exact figure is not -- but as per my knowledge, more than 50% of the amount has been spent and even worked also in process more than around 60%, 70%. That's what is my knowledge.

Operator, do you have any another questions?

So speakers, we do have questions from the line. We'll take our next question from Mr. [ Mustafa Amir ] from [indiscernible] Investments.