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

Good morning, everybody. Welcome to QIMC's Investors Conference Call Presentation for the Results of Q2 2022. My name is Surya Narayanan. I'm a business analyst here at QIMC. We have in this meeting from our side, Mr. Abdul Rahman Ansari, the CEO of QIMC, we have Mr. Mazen Abu Safa, our Finance Manager. Thank you very much for joining Erin, John and James. Hopefully, some more people will join as we go through the meeting. Please allow me to share a presentation, and then we'll open the floor for question and answers. This presentation is in 3 parts. First, we'll have a company overview for the benefit of those who are attending our conference call for the first time. Then we'll quickly go through the financial performance of the company and also we'll share some operational highlights as to what we have achieved and how things look on different fronts. First is a company overview. QIMC was established in 1990. We are listed in the Qatar Stock Exchange from inception. We have a paid-up share capital of QAR 475.2 million, which is 475.2 million shares of nominal value, QAR 1. We have core competency 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 and 12 associates. So these are the 8 subsidiaries. Qatar Acids, which manufactures sulfuric acid; KLJ Organic Qatar, which manufactures chlorinated paraffin wax, caustic soda, hydrochloric acid and calcium chloride; and then we have Qatar Paving Stones, which manufactures hollow blocks, interlocks and paving stones and kerbstones; Qatar Sand Treatment Plant, which manufacturers washed sand and aggregate; Q-COAT, which is Qatar metal coating company, which produces Epoxy-coated metal bars, steel bars; Natoinal Paper Industries Company, which produces various kinds of tissue, special tissue, toilet rolls, kitchen rolls; Jahiz, which is tea packaging company, which packs the tea for Unilever. And we have Gulf Glass Factory, which is a factory in commissioning. It will produce glass containers. Now going over to our associates. QJet is an aviation fuel distribution company. QPPC is Qatar Plastic Products Company, which manufactures [indiscernible] films and shrinkable films and also palletes. Gulf Formaldehyde produces urea formaldehyde. Gasal produces industrial gases. United Chemical produces calcium chloride. Qatar Clay Bricks Company produces concrete blocks, interlocks and kerbstones. We have Amiantit Qatar Pipes [indiscernible], which are kind of in the same business, but using 2 different technologies. They both produce glass reinforced pipes. Then we have Qatar Saudi Gypsum Company, which produces gypsum powder. Qatar Aluminum Extrusion Company, the leading aluminum profile manufacturer here, they produce mill finished, powder-coated and special purpose aluminum profiles. Then we have Mahaseel National Food Company, which processes and packs and markets various food products, including dates, a subsidiary of Mahaseel is Qatar-Tunisian food company, which bottles and markets olive oil. Now we have a couple of ongoing projects. One is the Gulf Glass Factory. This factory is under commissioning. It will utilize available sand and natural gas, modern technologies and equipment to produce high-quality, lightweight glass containers of various colors, sizes and shapes. This project is located in the new industrial area. And the design capacity of this plant will be 200 tonnes per day of glass containers, which is nearly 1 million bottles and jars per day. This is a first of its kind environment-friendly factory in Qatar, which will serve the local region as the worldwide food and beverage industry. Then the other signature project that we have is a Corniche Park Towers, our first investment in real estate, it is a combination of 3 towers, hotel, residential and office towers, which are interlinked, it's going to be having a 38-floor hotel tower, a 29-floor residential tower, and a 24 floor office tower. And then it will also have some retail area in the core podium level, so with ample parking space. We'll talk about the current progress of these 2 projects in the subsequent slides. Now we will focus on the financial performance of the company during the first half of 2022. As you can see, the total assets of the company as on 30th June stands at QAR 3,424.69 million. Total current assets amount to QAR 728 million and noncurrent assets stand at QAR 2696.66 million. Our total current liabilities QAR 381.19 million with a working capital of QAR 346.84 million. The total equity attributable to shareholders stands at QAR [ 1.73195 ] billion. During the first 6 months, we had a gross income of QAR 315.96 million with a profit before tax of QAR 90.47 million. We had other income of QAR 21.6 million. That gives us an earnings per share of QAR 0.19 per share. Our net profit posted was [ 90.47 ]. The net book value per share as on 30th June stands at QAR 3.64. The equity attributable to noncontrolling interest is QAR 46.1 million. As you can see, in almost all the parameters, we have done better than the same period last year, the 6 months of last year. Now if you look at the total revenues, 243.57 was the revenue during the first half of last year. This year, we reported 315.96, so the total revenue is up by 30% over last year. The net profit stands at 90.47 compared to 63.35, so the net profit is up by 43%. So if you look at where we started and where we ended the net profit for last year was 63.35 for the first half. And then the gross profit has increased by 28.43, the share of results of associates had the positive change of QAR 10.42 million. In almost all the other parameters, we are more or less in line with last year. The noncontrolling interest is 11.4 because a couple of subsidiaries in which we have a joint venture with other companies, they have posted good profit, so their share in the profit has become higher. So that leaves us with a net profit for the first half of 2022 at QAR 90.47 million. So in terms of some explanation, the gross profit is up because KLJ Qatar and Qatar Paving Stones has performed significantly better than the first half of last year. The share of results from associates higher due to better performance from most of our subsidiaries, in particular, QPPC, QJet and QSG and Gasal have done very well, partially offset by comparatively low performance from Amiantit and GFC. The dividend from share market portfolio, other income and expenses, they're all in line with last year. Profit attributable to, as I explained because JV companies, which are among subsidiaries have done better compared to last year. Now in terms of total assets, we have a total assets of QAR 3424.69 million that is QAR 3.4 billion compared to QAR 2.92 billion as on 30TH June 2021. Our total equity stands at QAR 1.731 billion compared to QAR 1.616 billion as on 30th June 2022. Increase in assets due to upcoming QMC towers and CapEx in subsidiaries. Increase in total equity due to positive fair value reserve and higher retail earnings. Now earnings per share, as I explained, it is QAR 0.19 compared to QAR 0.133 in the first half of last year. Our return on assets is 2.85% during the first half of this year compared to 2.31% in the first half of last year. So that was a quick review of our financial performance for the first 6 months of 2022. Some operational highlights in our projects and our existing companies. KLJ Organic Qatar exported its products to more than 25 countries in Middle East, Africa, Europe, Asia and the Americas. Qatar Paving Stones has started exporting some of its products to Kuwait. Qatar Aluminium Extrusion company has exported its product to Europe, Australia, Africa as well as to U.S.A. besides Middle East. The company has taken a metal coating facility on lease from a local company. Qatar Clay Bricks Company has started selling various sizes of standard and licensed kerbstones being produced on its new machines. Now these are some photographs from the Gulf Glass Factory, which is under commissioning. So it's progressing very fast. The civil work is expected to be completed within '22. The machinery and other equipment have already started arriving at the premises and the commissioning of this plant is expected to be completed in the first quarter of 2023. So the commercial production after testing is expected to start from July 2023. In terms of the civil construction, 50% is already completed and hand over the sector expected by November 2022. Nearly 70% of the machinery and equipment shipments have already arrived at the plant. You can see some photographs here. Now coming back to our Corniche Part Towers. The [indiscernible] installation works are completed up to level 27 for the residential, level 35 for the hotel and level 22 for office towers, the installation of aluminum system for cladding, all those things are happening now at level 25, lattice post installation is going on in all the towers, freak-out and joint area works, fabrication for the towers have achieved significant progress. We'll also share some live photograph from the project on the left-hand side, as it stands office tower, core tower and the residential tower. We have a view of the hotel tower lift lobby, residential tower lift lobby, office tower lift lobby, these are real pictures. Here also, we have on the left-hand side, some mockups, how things are going to look. On the left hand side, we have the hotel room and apartments mockup, on the right-hand side, we have the residential apartment mockup. So this was a quick overview of the projects and some updates about our operational companies. Now if you have any questions, we'll be very happy to take them. Mr. Ansari, our CEO, will handle your questions. We also have with us Mr. Sudhir Singh, our Senior Investment Officer. We regret to announce the demise of beloved mother of our Director of Finance and Administration, Mr. Aktham. He is usually there in this meeting, unfortunately, because of this incident, he is not with us today. Any questions from Erin, John, James, we'll be very happy to answer. If there are no questions, we will formally adjourn this meeting, and we hope to see you in our next meeting after we have the third quarter results with us, and we hope to put up an equally good performance in the third quarter as well. Thank you very much for joining us today. Stay safe, stay healthy. Thank you.