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

Okay. So let us start. It's 9:00. Welcome, everybody, ladies and gentlemen. My name is Aktham Al-Baqali. I'm the Director of Administration and Finance at the QIMC Group. And I've got to my left hand, Mr. Mazen Abu Safa, Head of Accounts; and in front of me, Mr. Surya [ Kedan ], Business Senior Analysis. And we are today here to do QIMC conference call, investor presentations for 2022. Our presentation is in the 3 parts, first part, as usual, a quick overview of the company. Second part will be the financial performance, and then we'll be having the operation highlights. And at the end, we will open the platform for Q&A. So I assume that everybody is okay in terms of hearing us clearly. So we can go ahead. Surya, go ahead with the presentation.

Good morning, everybody. I hope you can see the presentation on the screen. Welcome to QIMC's investor presentation for the year 2022, our full year -- end of the year presentation. As Mr. Aktham mentioned, this presentation is in 3 parts, company overview, financial performance and operational highlights. For those who are new to our company and for those who are attending our investor conference call for the first time, a quick overview of the company. QIMC was established in 1990, with 20% government stake and 80% private equity. We are listed in the Qatar Stock Exchange from inception. As on-date, we have a paid up share capital of QAR 475.2 million. That is 475.2 million shares of nominal value, QAR 1. Our core competency lies in establishing and managing small and medium-sized manufacturing companies. We have a diverse portfolio across chemical, petrochemical, energy services, construction materials, paper and plastic and food processing. We have 8 and 31 associates. Just a quick look at our subsidiaries, Qatar Acids Company, which produces sulfuric acid, KLJ Organic Qatar, which manufactures chlorinated paraffin wax, caustic soda, hydrochloric acid; and then we have Qatar Paving Stones, which manufactures hollow blocks, interlocks, paving stones and kerbstones; Qatar Sand Treatment Plant, which produces washed sand aggregate; Q-COAT, Qatar metal coating company, which produces epoxy-coated steel bars; National Paper Industries Company, shortly called NAPICO, it produces facial tissues, toilet rolls, kitchen rolls; we have [indiscernible] which is tea packaging company, and then we have Gulf Glass Factory, which will produce glass containers, is still under commissioning. On the associates side, we have Qatar Jet Fuel Company, which distributes aviation fuel to the airlines. Qatar Plastic Products and Wood Products Company, which produces [indiscernible] shrinkable films, wooden pallets. We have Qatar Aluminum Extrusion company, the leading aluminum extrusion company here in Qatar, which produces mill finished, powder coated and special purpose aluminum profiles of various sizes and shapes. We have Gulf Formaldehyde which produces urea formaldehyde. We have Gasal, which produces industrial gases; United Chemical that produces calcium chloride; we also have Amiantit Qatar Pipes Company, which produces glass reinforced pipes; and its subsidiary, Sarplast Qatar which produces glass reinforced pipes, using dual helix technology; we have Qatar Clay Bricks company, which produces concrete blocks, kerbstones and [ OD ] bricks; Qatar Saudi Gypsum Company, which produces gypsum powder; Mahaseel, which is National Food Company, which processes and packs and markets various food products, including dates; and it has got a subsidiary company, Qatar-Tunisian oil company, which bottles and markets olive oil. So that's a core view. Our ongoing projects, Gulf Glass factory, which utilizes locally available sand and natural gas, modern technology equipment to produce high-quality, lightweight, glass containers of various color sizes and shapes. This is the first of its kind factory in Qatar, which will serve the local and regional market. The project is located in new industrial area, and the design capacity of the plant will be 200 tonnes per day of glass containers, nearly 1 million bottles and jars per day. Other ongoing project is Corniche Park Towers, which is a multi-use tower or combination of 3 towers, 1 for the hotel -- 5 Star Hotel, one for office use and one for residences. We will share more information about the progress on these 2 projects towards the end of this presentation. Now we'll move on to the company's financial performance for the full year. As you can see, the total assets of the company as on 31st December, 2022 stands at QAR 3.47 billion compared to QAR 3.18 billion as on 31st December, 2021, which marks 9.3% increase over last year. Total current assets is QAR 602.38 million compared to QAR 699.36 million Total noncurrent assets QAR 2871.88 million compared to QAR 2479.44 million. Total current liability is QAR 332.2 million compared to QAR 301.26 million. Working capital is QAR 270.18 million compared to QAR 398.1 million. Total equity of the shareholders stands at QAR 1769.16 million compared to QAR 1698.21 million as on 31 December, 2021. The gross income of the company was QAR 627 million compared to QAR 500.01 million last year. The profit before taxes and provision is QAR 152.13 million compared to QAR 139.21 million Out of this, the other income contributes QAR 71.5 million compared to QAR 47.36 million last year. Earnings per share is QAR 0.32 per share compared to QAR 0.29 per share, which amounts to 10% increase. The net profit of the company is QAR 152.13 million compared QAR 139.21 million. The net book value of the shares stands at QAR 3.72 compared to QAR 3.57 as of 31st December, 2021. The equity attributable noncontrolling interest is QAR 50.75 million compared to QAR 41.1 million. Now going further deep into the data; the total revenues, as you can see, is QAR 500.01 million - QAR 627.21 million compared to QAR 500.01 million last year and the net profit, QAR 152.13 million compared to QAR 139.21 million. The total revenues have increased by 25% over last year, mainly on account of KLJ Organic Qatar, and slightly lower revenue from Qatar sand treatment plant during this year. In terms of net profit, we are up by 9%, thanks to significantly higher performance on KLJ Organic Qatar, Gasal, Qatar Paving Stone, Qatar Assets, while Amiantit, Sand Treatment, [indiscernible] and Q-COAT yielded lower net profit compared to last year. Now in terms of how we have moved from QAR 139.21 million to QAR 152.13 million in terms of net profit. Gross profit has increased by QAR 43.5 million. Share of results from associates is down by QAR 34.41 million. Dividend from shares is more or less the same as last year. Other income is up by QAR 24.23 million. Finance cost is marginally higher at QAR 2.42 million. Non-operational losses or gains due to adjustment for IFRS-9 and 16, that's about QAR 9.59 million, noncontrolling interest QAR 48.93 million. So that's how we have reached QAR 152.13 million compared to QAR 139.21 million last year. There are some explanations; KLJ Organic Qatar, as I mentioned earlier, has reported highly -- significantly higher profit, also Gasal, whereas Amanitin and QSTP have yielded slightly less profit. Sales and other -- distribution and other expense is up in some subsidiaries, which is in line with their volume or revenue growth, which is expected because you would see the 25% increase in our revenues also during this period. We have a higher real estate income from the logistics warehouse, which is fully leased out. Now total assets of the company as on 31st December, 2022 stands at QAR 3474.26 million compared to QAR 3178.65 million. The total equity stands at QAR 1819.91 million compared to QAR 1739.11 million. [indiscernible] in assets, Due to progress in the real estate project equity, higher on account of retained earnings. Now project updates, this is the third part; Gulf Glass factory, the construction is currently underway and progressing according to schedule, expected to be completed in Q3 '23. We have received 50 new shipments, around 282 containers of the machinery in different parts, installation of equipment, testing and commissionings will be completed in third quarter. The acquisition of adjacent plot, [indiscernible] glass has been completed. The ownership has been transferred to the Gulf Glass factory. This plot will be used to house the glass decorating line, as well as additional warehouse, because this is an extension of the project, which was not in the original scope.

And I just wanted to add to the glass, the mechanical commissioning has started already.

Now progress on the Corniche Park Towers, the facade unit, tiles, panels, the insulation work is on -- and mostly completed in all the 3 towers. Main core facade work is completed. [indiscernible] glass facade, structural band [indiscernible] insulation works are on. Integral lattice, insulation work is substantially completed. So a lot of work has happened within these 3 months since we met last. These are some actual photographs on the site in different parts of the project, the multifunctional area, pre-functional area, stealing works, and so on. And we also have some photographs of the mockups, how the hotel rooms and apartments are going to look like, how the residential apartments are going to look like. So everything is coming together in good speed. So that's about the presentation for the year 2022. I hand it over back to Mr. Aktham for any Q&A.

Thank you, Surya. This presentation was really so informative. So I would assume that most of the questions that our shareholders might have -- must have already been addressed. But everyone at this platform is welcome to raise any questions, [indiscernible]. Please go ahead, Mr. Zohaib.

If we can stop the sharing, then we'll be able to see each other better. And if you want to go back any slide, please keep the slides on.

No, that's fine. We can stop the sharing, if you want. So my question -- I've got a few questions. Firstly, what was the reason for this big increase in other income? That's my first question. My second question is that, on the revenues -- the revenues from caustic soda or KLJ was -- have been really strong in 2022. This was because the price was higher or because the volume was sold -- more volume was sold. So could you tell us the rationale for this significant increase? And thirdly, how much of the finance cost is capitalized?

Again, last one?

How much of the finance cost is capitalized?

Okay. Okay. Zohaib, I think very smart questions you have raised. Thank you for all of those 3. So the first question was -- I think was what is the other income, right? The other income -- go ahead Mazen, please go ahead.

Other Income is many factors in other income, mainly there is tax fund -- from tax department to QIMCO share formation and...

Second?

And there is the interest on loans and dividends. And also there is the interest in the deposits -- and interest on loan -- so there's 3 things -- there is this much. [indiscernible].

In summary, there is -- in some of our associates, the way that we are treating taxation is that the whole income is being taxed, but our portion is attributed to our foreign shareholders as per the stock market, which is less than the rest of the partners. So they took -- they take the whole rate of taxation at the end of the year and they do, let's say, reversal entry during the following year. So this year also, we'll enjoy reversal entries for 2022.

So it's 3 things; profit on deposit, dividends from your investments and tax reversals.

Yes, exactly.

How much is the tax reversal of this QAR 72 million?

I think, maybe around QAR 12 million.

QAR 12 million.

So your second question was about KLJ. And -- you said about KLJ, about -- you said 2 things about KLJ, right?

Whether it's volume or price.

Whether it's -- it's both honestly, to be frank, it's both. And we are assuming that the price will sustain during this year, maybe slow fractional dip down, not a big deal during 2023. But I think we will repeat the same result [Foreign Language] in 2023, as what we have done and performed during 2022. And the last question regarding KLJ I think again? That's it? Any other question.