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

Good morning, to everyone and everybody. Yes. Do you have any participants right now for the conference?

Yes, Mr. Zohaib is there. [ Mr. Namesh ], and there is 1, [ Anjuman ], administrator.

So let us -- without further ado, let us start off our conference call meeting for QIMC First Half Results for 2023. Surya would you like to present the agenda. Please put the agenda on the screen.

Yes, sir.

While Surya is doing agenda on the screen, we'd like to introduce ourselves. Me, myself, Aktham Baqali. I am the Director for Administration and Finance. And we've got also at the meeting room on the left side, Mr. Mazen Abu Safa is the Head of Accounts. And the speaker, Surya as business senior analyst. So as you can see here on the table of the contents of our today's presentation, we will go quickly as usual, over the company overview and then financial performance and then some operational highlights, closing this conference call by Q&A. Surya, please go ahead for the first part of the discussion, company overview, and financial review and operational highlights.

Thank you, Mr. Aktham. Good morning, everybody. For proper conduct of this meeting, may I request everybody to keep their mic on mute so there are no other disturbances. Of course, during the Q&A session, everybody is open to ask questions. So QIMC was established in 1990. It's listed on the Qatar Stock Exchange from inception. As on date, we have a paid up share capital of QAR 475.2 million, which is 475.2 million shares of nominal value of QAR 1 each. QIMC's core competency lies in establishing and managing small- and medium-sized manufacturing companies. We have a very diversified portfolio across chemicals, petrochemicals, energy services, construction material, paper and plastic and food processing. We have 8 subsidiaries and 12 associates. So these are our subsidiaries, Qatar Assets Company, which manufactures sulfuric acid, Qatar Sand Treatment Plant, which manufactures washed sand and aggregate. We have Qatar Paving Stones, which is adjacent to Qatar Sand Treatment Plant. It manufactures hollow blocks, interlocks, paving stone and curbstones. National Paper Industries Company, one of the oldest tissue converters company, and converting company here in Qatar. And [indiscernible] which is a tea packaging company, which serves Unilever at the moment. These are the 5 companies, which are 100% owned by QIMC. We also have 3 other subsidiaries in which we have 50% or more share. Qatar Metals Coating Company shortly for Q-Coat, which is a joint venture with Tata Steel, it manufactures the epoxy-coated steel bars. KLJ Organic Qatar, which is a joint venture with KLJ India, it manufactures chlorinated paraffin wax, caustic soda prills, hydrochloric acid and hypochlorite. And Gulf Glass Factory, which is a factory under commissioning, it will manufacture glass container, we have more information on this company very soon. These are our associates. Qatar Jet Fuel Company in short called Q-Jet. It supplies aviation fuel to the airlines industries here in Qatar. It's a joint venture with WOQOD. QPPC, Qatar Plastic and Wood Products Company. It manufactures FFS films, shrinkable film, wooden pallets and composite pallets. It's a joint venture with QAPCO. Then we have Qatar Aluminum Extrusion Company, in short QALEX. It manufactures mill finished powder coated and special-purpose aluminum profiles of various sizes, shapes and colors and of different types. So this company is also a joint venture in which we have 45% stake. Then we have Gulf Formaldehyde, which is a joint venture with GF -- with QAPCO and also a foreign partner. This company manufactures urea formaldehyde. Then we have Gasal. This is an industrial gases manufacturing company. This company is a joint venture with Qatar Energy and Air Liquide, France. Then we have United Chemicals, which manufactures calcium chloride. This is a subsidiary of KLJ Organic Qatar. It has got also a partner in Gulf Chlorine. Then we have have Amiantit Qatar Pipes Company, which manufacturers glass reinforced pipes and they've got a subsidiary called Fiber Tie. It also manufactures glass reinforced pipes. We're using a different technology for a different purpose. Then we have QCBC, Qatar Clay Bricks Company. It manufacturers concrete blocks, kerb stones and body bricks. Then we have the Qatar Saudi Gypsum Company, which manufactures gypsum powder. Then we also have a stake in Mahaseel, a natural food company, which processes packs and markets, various food products, especially dates. Mahaseel has got a subsidiary called [ Clinician Oil and Food Company ], which bottles and markets olive oil. So these are our associates. Our ongoing project, this is Gulf Glass Factory. This will utilize locally available sand and natural gas, modern technology and equipment to produce high-quality, lightweight glass containers in various colors, sizes and shapes. This project is located in the new industrial area. And the design capacity of this plant is 200 tonnes per day of glass containers, nearly 1 million bottles and jars per day. This is a first-of-its-kind environment-friendly factory here in Qatar, which will serve local and regional market as well as beyond worldwide food industry. This factory is being commissioned by an Italian specialist glass technology supplier. The other ongoing project is our Corniche Park Towers, which is a multi-use building coming up on the Corniche. So it has got an office tower, which is a prime office building where QIMC will also have its headquarters very soon, once this building is ready. And we have got 17 floors available for renting. Then we have a residence tower, which will have 29 floors. This is a luxury residential apartment, which will have 121 bedroom apartments. This will also carry the brand name Swiss Hotel and will be operated by Accor. The third one is the hotel tower, which is the tallest tower among the 3, it is a 5-star -- going to be a 5-star hotel again operator under the Swiss Hotel brand managed by Accor. This will have 342 guestrooms. This is building also houses 4 podium levels, having 4,100 square meters, which will have signature retail brands and hotel facilities. Now coming to financial performance of the company for the first half of 2023. The total assets as on June 30, 2023 stands at QAR 3.68 billion. Total current assets is QAR 0.62 billion and total noncurrent assets is QAR 3.07 billion. Total current liability is QAR 0.38 billion, which gives a working capital of QAR 0.24 billion. The total equity to shareholders stands at QAR 1.81 billion. During the first 6 months, we had a gross income of QAR 260.52 million and profit before taxes in provision was QAR 107.21 million. This included other income of QAR 57.56 million. The earnings per share of face value QAR 1 is QAR 0.226. The net book value per share as on June 30, 2023 stands at QAR 3.80. The attributable to noncontrolling interest is QAR 53.41 million. As I mentioned, the total revenue of QAR 315.96 million compared to QAR 260.52 million during the first half of 2022. This represents 17.5% increase over last year. The net profit stands at 90 point -- QAR 107.25 million, which is more than last year by 90 point -- which was 90.4%. So in fact, the total revenues is less by 17.5%.income to that in a while, some explanation we have. The net profit is actually up by 18.5% compared to last year or first 6 months of last year. Now this is a comparison between last year and this year. QAR 90.47 million was our net profit for the first half of last year. The gross compared to last year is down by 12.5%. This is mainly due to lower performance in some of our companies -- subsidiaries, Qatar Sand Treatment, Paving Stone and KLJQ. At the same time, some companies like Qatar Acids and Q-Coat have performed better than the last year. The share of results from associates is higher by QAR 2.91 million, and this is mainly supported by Gasal and GFC and Q-Jet. Other income, you can see, QAR 35.97 million more than last -- first half of last year. This is mainly due to higher tax exemption income from Gasal and it includes accruals for the current year, January to June 2023. As we can see that our finance costs have also increased compared to last year. This is mainly due to the interest rate in KLJQ. Total assets -- there is end, new participant, let me [indiscernible] total assets as on June 30, 2023 stands at QAR 3.69 billion compared to QAR 3.42 billion as of June 30, 2022. Total equity is QAR 1.86 billion compared to QAR 1.78 billion as of June 30, 2022. Increase in total equity is due to positive fair value reserve and higher retained earnings and total assets is higher due to progress in Corniche Park Towers and CapEx in our National Paper Industries Company. As I mentioned, the earnings per share is up from QAR 0.19 to QAR 0.226 compared to last year first 6 months. And return on assets has increased to 3 -- marginal increase to 3.02% compared to 2.85% in the first half of last year. Now some operational highlights. As you can see, this is our Gulf Glass Factory. Construction is going in full swing, and it is expected to be completed by the fourth quarter of this year. The main building is mostly completed. EPC contractors started installing the equipment. Lot of machineries already, around 61 shipments, 297 containers. Installation of equipment has started. Testing and commissioning will start in Q3 and hopefully, it will get into production by Q4. We have also acquired an adjacent plot. I mean this plot will be used to house the glass decorating line as well additional warehouse for the glass containers. The construction of this building has also been completed. Now coming to Corniche Park Towers. Again, a lot of progress has taken place since the time we met last time. So [indiscernible] works in the hotel building up to Level 21 and apartment tower up to level 25. Glazing works is going in full swing. Kitchen cabinet installation is happening in the apartment towers. So a lot of work is happening parallelly in all the different fronts. MEP work is also happening. [ posada ] works all the tower cranes have been dismantled I think the work what have been completed. [ posada ] [indiscernible] you see post installation on the back location. Podium level work has been completed. QIMC office fit-out work is also under progress in full swing. [ Block works ] is under -- steelworks is completed and block works are going on. These are some photographs from the actual site, lifestyle [indiscernible] back alter work is underway. Persian restaurant as being established and the [ meeting ] area for the [indiscernible] wall and ceiling finishes are happening. All the dining area whole kitchen is happening. So that is the update from us in terms of the Q2 performance and our operational highlights from our glass factory and real estate. Now I hand over the control back to Mr. Aktham to lead the Q&A session.

Gentlemen, I hope the presentation was informative and addressed most of or some of what you've got I mean to raise during this last session of this presentation. I hope that you have some queries to raise up, feel free to raise any questions you've got.

This is Zohaib from Al Rayan Investment. Salaam-Alaikum.

Alaikum Salaam, Zohaib. How are doing?

I'm very good. So I've got a few questions. Firstly, your sales in this quarter declined by went from QAR 195 million in last -- in second quarter '22 to QAR 125 million. Could you tell us the rationale, which segment was responsible or which company was responsible...