Qatar Industrial Manufacturing Company Q.P.S.C. (QIMD) Earnings Call Transcript & Summary

Welcome, everybody, to QIMC First Half Earnings Conference Call. Our presentation today is comprising of 3 parts. The first part, as usual, is the company overview and then the financial performance and the last operational highlights. And for sure, at the end, we'll be opening the floor for questions. We've got here in our QIMC team. We've got the Director of Investment and Follow Up, Dr. Farouq; and we've got the Head of Accounts, Mr. Mazen Abu Safa. And we've got the speaker here, Mr. Surya. And if I -- if you have any questions before we start off regarding the communication quality, please raise up your voice. Otherwise, you could start our presentation. Go ahead, Surya.

Good morning, everybody. Welcome to the QIMC Investors Presentation for the First Half of 2021. We'll now make a presentation, which will take you through our company's overview, financial performance, and then we'll open up for question and answer. QIMC was established in 1990 with 20% stake from the government and 80% private equity. We are listed at the Qatar Exchange from the inception. As of now, we have a paid up share capital of QAR 475.2 million, which is again, 475.2 million shares of nominal value of QAR 1. Our core competency lies in establishing and managing small and medium-sized manufacturing companies. We have a diversified portfolio across chemicals, petrochemicals, energy services, construction materials, paper and plastic and food processing. We have 8 subsidiaries and 13 associates. Just to show a glimpse of our companies. We have Qatar Acids, which manufactures sulphuric acid. We have KLJ Organic Qatar, which manufactures chlorinated paraffin wax, caustic soda, hydrochloric acid. And then we have Qatar Paving Stone, which manufacture hollow blocks, interlocks, paving stones, kerbstones. Qatar Sand Treatment, which produces washed sand and aggregates. Qatar Metals Coating Company, which produces epoxy coated steel bars. National Paper Industries Company, which converts jumbo paper rolls into facial tissues, kitchen rolls, toilet rolls and so on. We have Jahiz, which is a tea packaging company, doing contractual work for Unilever. We have Gulf Glass Factory, which is a new factory, which is under commissioning. Then we have our associates, Qatar Jet fuel company, which is supplying aviation fuel to the airlines. Qatar Plastic Products Company, which manufactures films and shrinkable films and packaging material for the chemical industries. We have other wood products company, which manufactures wooden pallets. We have Gulf Formaldehyde, which manufacture urea formaldehyde. Then GASAL, which produces industrial gases. United Chemicals, which produces calcium chloride. We also have Amiantit Qatar Pipes, which benefacts glass reinforced pipes. Sarplast Qatar, which is also into a similar business, producing a different kind of technology. Then we have Qatar Clay Bricks, which manufactures hollow blocks and pavers. Then we have Qatar Saudi Gypsum Company, which produces gypsum powder for the construction industry. Qatar Aluminum Extrusion Company, which produces mill finished, powder coated and special purpose aluminum profiles of various sizes and shapes. We are a National Food Company, which processes and packs the various food products. And a subsidiary of that is Qatar [ Finnish ] and Food Company, which is bottling and marketing olive oil. Our new ongoing project is Gizaz Glass Factory. This project will utilize up-to-date modern technologies and equipment to produce high-quality, light weight glass containers of various sizes and shapes. The raw materials for this will consist of local as well as imported sand, soda ash, calcium carbonate, crushed glass and other chemicals and natural materials. Natural gas will be used as fuel for this company. On the real estate front, we have a Corniche Park Towers, which is a mixed-use development owned by Qatar QIMC. It is rising through on it -- 10,435 square meters of land lateral to Corniche road short. Then we have Corniche Park, which is also housing 24-hour -- 24-floor office tower, 31-floor residential towers with 1-, 2-, and 3-bedroom apartments and the 38-floor hotel and service apartments. Now highlights of our financial performance during the first half of this year. As you can see, the company has QAR 2.9 billion assets as of 30 June 2021. Total current assets is QAR 656 million. Total noncurrent assets is QAR 2.26 billion. Total current liability is QAR 298.49 million, working capital of QAR 357.6 million. Total equity to the shareholders amounts to QAR 1.61 million. During this first 6 months, we generated a gross income of QAR 243.57 million and profit before taxes and provisions, QAR 63.35 million, of which other income contributes QAR 22.13 million. Our earnings per share stands at QAR 0.13 and net book value stands at QAR 3.40. As you can see in comparison with the same period last year, we have done well on all the parameters. We'll go into the details in the subsequent slides. First, let us look at our revenue and net profit. During these first 6 months, our total revenue was QAR 243.57 million compared to QAR 178.56 million during the same period last year. That shows 36.4% increase over last year. On the net profit, it is QAR 63.35 million compared to QAR 42.38 million which represents 49.5% increase over last year -- same period last year. Total comparative analysis of net profit between last year and this year and the components that have contributed to this. As you can see, the gross profit is up by QAR 8.15 million compared to last year. The share of results from associates is less by QAR 5 million. Sales and administration expenses has increased by QAR 4 million compared to the first 6 months of last year. Other income is up by QAR 14.8 million. We have explanation for this thing. Gross profit is up as most of our subsidiaries have performed better compared to last year for 6 months. The share of results from associates is lower, largely due to lower profit from Qatar Jet, Amiantit and Gasal. And our higher sales and distribution general expense is in line with the increase in turnover. So we have done fairly well on most of the parameters, resulting in 49.5% increase in net profit in the first 6 months compared to the same period last year. This year, as you can see, the QAR 14.8 million in other income predominantly coming from the additional rent income from the logistics warehouse complex starting from this year. It is now fully rented out. The total assets of the company, as I said, is QAR 2.92 billion compared to QAR 2.57 billion -- QAR 2.58 billion as on 30 June 2020. There is an increase of 13.2%. The increase in assets is due to logistics warehouse. Now it has completely come up, it is now part of our assets. Total equity is QAR 1.66 billion, compared to QAR 1.61 billion during the -- as on 30th June 2020. And that shows an increase of 3.2%. Our earnings per share is 13 dirhams per riyal compared to 9 dirhams per riyal for the first period -- first 6 months of 2020. And in terms of return on assets, for the first 6 months of this year, we have won 2.31% compared to 1.72% in the first 6 months of last year. Now some operational highlights. Our subsidiary KLJ Organic Qatar exported products to more than 25 countries in Middle East, Africa, Europe, Asia and the Americas. Qalex has exported products to Europe, Australia, Africa as well as to the U.S.A. besides Middle East. Amiantit & Sarplast Qatar, they exported products to Oman and Iraq. Qatar Clay Bricks is in the process of installing a new machine to produce large-sized kerbs used in infrastructure projects. The -- This is under commissioning now. And when it is up and running, this will be only the second company in Qatar to be able to produce this size of kerbstones. Now operational highlights, what's happening on the Gulf Glass Factory. It is currently in the final stage of detailed engineering and design. Civil contract has been selected to build the plant building and facilities. Mobilization and site preparation has already begun, and construction are expected to finish in about 12 months. EPC contractor finalized and signed with a world-class company based in Italy to design, supply and install and commission the plant. Product activities are already underway in completing the basic design, detail engineering, procurement and so on. On the Corniche Park Towers, all the concrete works of the hotel, office and residential towers for all levels have been completed. Glass facade works for the hotel and office towers have reached up to level 22 and residential tower is up to level 27. Facade installation for the podium levels are now progressing. Glass installation is going on in level 2 and level 3. And internal ID or subcontractor and [ FAB ] supplies have been mobilized and the work is already begun. These are some photographs of the actual photograph from the site. So that's it from the presentation. Back to for the question-and-answer session.

Gentlemen, the floor is open for any questions from the investors side. Please, if you do have any clarification question, please raise it up.

[indiscernible], any questions from your side?