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

Good morning, everybody. Welcome to QIMC's third quarter conference call. My name is Aktham Al-Baqali, I'm the Director of [indiscernible] and Finance. We've got here also Surya [indiscernible] as a Senior Business Analysis. And I've got also here on my left hand, Mazen Abu Safa, Head of Accounts. Today's meeting will cover 3 topics. As usual, the company -- quick company overview, financial performance, then operational highlights. At the end, we'll open the floor for Q&A. [Operator Instructions] Surya, please go ahead.

Good morning, everybody. Hope you can see the presentation on the screen. Welcome to QIMC's third quarter investors conference call. As Mr. Aktham mentioned, we have 3 segments in this presentation, company overview, financial performance, operational highlights. Started with company overview. QIMC was established in 1990, and we have been listed at the Qatar Stock Exchange from inception. Our greater share capital as on 30th September stands at QAR 475.2 million, which is 475.2 million shares of nominal value, QAR 1. QIMC core competency lies in establishing and managing small and medium-size manufacturing companies. We have a diverse portfolio across multiple sectors, including chemicals, petrochemicals, energy services, construction materials, paper and plastic and food processing. We have 8 subsidiaries and 12 associates. These are our subsidiaries: Qatar Acids Company, manufactures sulfuric acid, only sulphuric acid manufacturing power plant in Qatar. Qatar Sand Treatment Plant, one of the oldest sand washing facilities in Qatar. Then we have Qatar Paving Stone, which is adjacent to Qatar Sand Treatment Plant, and it manufactures hollow blocks interlocks and paving stone and kerb stones. Then we have NAPICO, National Paper Industries Company, which is a paper converting company and the first paper tissue converter company and the leading one in Qatar. It manufactures facial tissues, toilet roll, kitchen rolls and related products. Then we have Taabia, which is a tea packaging company, which currently packages Unilever's red label and yellow label tea in bulk. And then we have Qatar Metal Coating Company, which is shortly called Q-Coat. This is a joint venture with Qatar Steel Company. We have 3 person stake, and they have 50% stake. Then we have KLJ Organic Qatar, which is a chemical manufacturing company, which manufactures caustic soda, chlorinated paraffin wax, hydrochloric acid and hypo. In this company, we have 40% stake -- 60% stake, and the 40% stake is held by Indian company, KLJ India. Then we have Gulf Glass Factory, which is a factory under commissioning, we'll have more details about it in the next section of the presentation. This factory will manufactures glass containers, the first of its time in Qatar. In this company, we have 50% stake. Then we have our associates, Q-Jet, Qatar Jet Fuel Company, in which we have a 40% stake. The remaining 60% is held by WOQOD. This company distributes aviation fuel in airlines in Qatar. Then we have Qatar Plastic and Wood Products Company. This company -- in this company, we have 30% stake -- 66.6% stake and the remaining 1/3 is held by QAPCO. Then we have Qatar Aluminum Extrusion Company, which produces different types of aluminum profiles, mill finished, powder coated, special-purpose aluminum profiles. In this company, we have 45% stake. Then we have GFC Gulf Formaldehyde company, which manufactures urea formaldehyde. In this company, we have 30% stake. The remaining 70% is held by QAPCO and its foreign partner. Then we have Gasal, industrial gases manufacturing company. In this company had 29.5% stake and the remaining stakes are held by Qatar Energy and Air Liquide, France. Then United Chemicals, which is a subsidiary of KLJ Organic Qatar, it manufactures calcium chloride. And KLJ has 65% stake in United chemicals. Then we have Amiantit Qatar Pipes Company, which manufactures glass reinforced pipes. In this company, we have a 40% stake. And it has got a subsidiary, FiberTie. It also produces glass reinforced fiber pipes but using a different technology, but for a different purpose. Then we have Qatar Clay Bricks Manufacturing Company, which manufactures concrete blocks, kerb stones and hordi bricks. In this company, we have 46.35% stake. Then we have Qatar Saudi Gypsum Company. In this company, we have 1/3 stake. And then we have a National Food Company. In this company we have 20% stake, remaining is held by Hassad Food Company. And this company has got a subsidiary, it is Qatar [indiscernible] Oil Company, which bottles and markets olive oil. So these are our subsidiaries and associates. Now ongoing project the Gulf Glass Factory. As I mentioned, this is going to be our first of its kind in Qatar. The design capacity of this plant will be 200 tonnes per day of glass containers, near 1 million bottles, jar and glass per day. Then we have our Corniche Park Towers, which is our first real estate venture. This is a multi-use complex with the 3 towers. The office tower will have 22 floors, in which 5 floors will be taken by QIMC headquarters and then we have 17 floors for other clients. Then we have a residential tower, it have 29 floors, it's luxury residential apartment with 121 bedroom apartments. Then we have a hotel tower, which is a 5-star hotel. It will have 342 guest rooms. Then we also have 4 podium levels with the variety of retail brands and essential hotel facilities. So that takes us to the financial performance of the company. Now the total assets of the company as on 30th September 2023, stands at QAR 3,650.89 million million compared to QAR 3,492.06 million the end of September 2022. Our total current assets QAR 538.8 million, total noncurrent assets QAR 3.11 billion, total current liability, QAR 316.29 million, working capital QAR 222.51 million. The total equity to shareholders stands at QAR 1,914.17 million. The gross income we earned during this 9 months of 2023 was QAR 373.69 million, then the profit before tax inversion of QAR 143.22 million, that included other income of QAR 76.84 million. The earnings per share is QAR 0.301 per share. The net book value per share should stand at QAR 4.03 per share. The equity includes equity attributable to noncontrolling interest of QAR 59.4 million compared QAR 49.18 on 30th September 2022. Now as you can see, the total revenues, QAR 373.69 million as compared to QAR QAR 475.66 million in same period last year. And net profit QAR 143.22 million compared to QAR 136.03 million. The total revenues is less by 22.4%. However, the net profit is up by 5.3%. Now just a comparison between the first 3 quarters of 2022 versus 2023. So the net profit of 2022 for the 9 months was QAR 136.03 million. And from that -- the gross profit current during the current year is QAR 26.01 million less, and share [indiscernible] to our associates is also less by QAR 4.29 million. Our sales and administration cost is slightly up by QAR 7.33 million. And where our higher income -- other income is higher to QAR 46.42 million. Finance cost is up by about QAR 10 million. We'll explain the reasons in -- drop in gross profit is primarily due to lower performance of Sand Treatment, Paving Stone and KLJ, and partially offset by better performance of Qatar Acids. In terms of our profits from our associates, Gasal, Gulf Formaldehyde, Q-Jet, [indiscernible] done well, but then again partially offset by lower performance from Plastic Product Company and QALEX compared to last year. Other income is higher due to higher tax exemption Gasal, including accruals for the current year. Higher finance cost is primarily due to the increase in the interest rate in KLJ-Q. Now total assets as on 30th September 2023 stands at QAR 3,650.89 million compared to QAR 3,492.06 million. Our total equity stands at QAR 1,914.17 million compared to QAR 1,823.50 million as of 30th September 2022. Total assets, higher due to progress in Corniche Park Tower project and also additional CapEx in NAPICO. The increase in total equity is due to positive fair value reserve and higher retained earnings. Our earnings per share, as I mentioned, is QAR 0.301 per share compared to QAR 0.286 per share during the same period last year. Our Return on assets is slightly lower compared to last year, 4.01% compared to 4.12% last year. Now operational highlights. This is about our glass factory. The EPC contract was awarded to at our lean glass technology providers, Falorni from Italy. The basic design and retail engineering has been completed. The plant will be commissioned in the next few weeks, we will test, plans and commercial production. Testing will start in the fourth quarter [indiscernible] in this quarter. We also acquired adjacent plot area for expansion of this particular project from Bravo Glass. So this plot will be used for housing the glass decoration line as well as additional warehouse. The commercial production of this plant is expected in Q1 2024. Now some highlights from our Corniche Park Towers, joinery works are most completed. It's already up to -- level 33 and apartment Level 27, glazing works up to -- reach up to level 29, apartment level [ 20 ], office level [indiscernible], and MEP work is also progressing very fast in the higher levels. [ Posad ] work were most completed, then the podium works will also -- [ Posad ] work completed, and QIMC office fit-out is is going on. At present, these are some photographs, actual photographs from the site. Different parts of the property. High style cafe, Persian restaurant, maintaining wall [indiscernible]. So that's it in the presentation about our performance and updates about on different projects. I hand over the control back to Mr. Aktham to handle the Q&A session.

Yes. Gentleman, you are back again after the presentations. We tried in in our presentation, it was very good one, but we tried our best to cover possible sales that we might ramp up with. But nevertheless, you have the floor to raise any question you please feel free. Hope you're all with us. We'll be happy to answer your questions. . If we get some feedback from anybody that you got -- Yes. enough information, out of our presentation today, and you are -- this is maybe the least that we could lend from you guys. I know the material that we have presented is quite informative. But in case you needed to -- us to elaborate on anything you already.

Also, we welcome suggestions for the improvement of the presentation, if you think anything missing, we can add that in our next presentation.