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

So welcome, everybody. I would like, I mean, to welcome everybody here today with a lot of presentations regarding the results of 2023, end of the year. And as usual, we'll go through the items that are going to be presented to you. Our presentation is consisting of 3 parts: quick review of our company and then quick -- and some details about performance of financials and then we'll give you some highlights about the operation. And I've got here as a speaker, Mr. Surya Narayanan; and I've here got here on my left Mr. Mazen Abu Safa, Head of Accounts; and myself, Aktham Al-Baqali, Director for Admin and Finance. The last session of this meeting will be Q&A. So shall we start, Surya? Go ahead.

Good morning, everybody. For a smooth presentation, if I may request everybody to mute your mics and you can unmute yourself if you have a question to ask either during the presentation or at the end of it during the Q&A session. Thank you very much. A quick company overview for those who are new to our presentation. We can see that there are a lot of people who regularly attend our presentations. QIMC was established in 1990 as a Qatari public shareholding company. We're listed in the Qatar Stock Exchange from the inception. As of 31 December 2023, we have a paid up share capital of QAR 475.2 million, that's 475.2 million shares of nominal value, QAR 1 each. QIMC's core competency lies in establishing and managing small- and medium-sized manufacturing companies. We have a divested portfolio across chemicals, petrochemicals, energy services, construction materials, paper and plastic and food processing. We have 8 subsidiaries and 13 associates. These are our subsidiaries: Qatar Acids Company, which manufactures sulfuric acid. We have KLJ Organic Qatar, which manufactures chlorinated paraffin wax, caustic soda pills, hydrochloric acid and hypochlorite. In this company, we have a 60% stake and 40% stake is held by an Indian company called KLJ India. Then we have Qatar Paving Stones, which manufactures hollow blocks, interlocks, paving stones and kerb stones. And we have Qatar Sand Treatment Plant, which manufactures washed sand and aggregates. We have Qatar Metals Coating Company, in short called Q-Coat, and this manufactures epoxy-coated steel bars. This is a joint venture with Qatar Steel. We have 50% stake and Qatar Steel has remaining 50% stake. Then we have NAPICO, National Paper Industries Company, the first and the largest tissue converting company in Qatar, which manufactures special tissues, toilet rolls and kitchen rolls. Then we have Taabia, the tea packaging company. Then we have Gulf Glass Factory, which is under commissioning, which will manufacture glass containers. This is a joint venture, and in which we have 50% stake and remaining 50% stake is held by different shareholders. And we have our associates: Qatar Jet Fuel Company, which are supplying aviation fuel to the airlines. In this company we have 40% stake, the remaining 40% is held by WOQOD. Then we have Qatar Plastic and Wood Products Company, which manufactures FFS films, shrinkable film, wooden pallets, et cetera. In this company, we have a 66.67% stake and the remaining 33.33% stake is held by QAPCO. Then we have QALEX, Qatar Aluminum Extrusion Company, the first and the largest aluminum extruder in Qatar which manufacturers mill-finished and powder-coated and special-purpose aluminum profiles. In this company, we've got 45% stake. Then we have Gulf Formaldehyde, which manufactures urea formaldehyde. This is a joint venture with Qatar Fertilizers Company, and we have 30% stake in this company. Then we have Gasal, which manufactures industrial gases like oxygen, nitrogen, hydrogen, argon and so on, using air suction units. We have 2 air suction units, one in Mesaieed and one in Ras Laffan. In this company, we've about 29.5% stake. And the other 2 shareholders in this company are Qatar Energy and Air Liquide France. Then we have United Chemicals Company, which manufactures calcium chloride. This is actually a subsidiary of KLJ Organic Qatar. KLJ Organic Qatar has got 65% stake in this company. Then we have Amiantit Qatar Pipes, which manufactures glass reinforced pipes. In this company, we've got 40% stake. Then we also have FiberTie, which also manufactures a similar product but for a different utility using a different technology. So in FiberTie, Amiantit Qatar Pipe has got 75% stake. Then we've got Qatar Clay Bricks Company, which manufacturers concrete blocks, kerb stones and hordi bricks. So in this company, we've got 46.35% stake. And Qatar Saudi Gypsum Company, which manufactures gypsum powder. In this company, we've got 33.33% stake. And we have Mahaseel, which is a National Food Company. It processes and packs and markets various food products, particularly dates. In this company, we've got 20% stake, remaining 80% is held by Hassad Food Company, which is a government-owned entity. Then we have [indiscernible] oil company, which is a subsidiary of Mahaseel and this company bottles and markets olive oil. As I was mentioning Gulf Glass Factory, GIZAZ, is an upcoming project or it's under commissioning. This factory will utilize locally available sand and natural gas and modern technologies. This will produce about 200 tonnes per day of glass containers, nearly 1 million bottles and jars per day. This is the first of its kind environment friendly factory in Qatar. It will serve the local and regional market as well as the worldwide food and beverage industry. Then we have Corniche Park Towers, our first foray into real estate sector. This is a mixed-use building consisting of 3 towers: one office tower, one residence tower and one hotel. The hotel will be a 5-star hotel, which will be operated by M/S Accor. The residence will be a fully furnished apartments, again, to be operated under Accor brand; and then we have office towers. So we'll have some updates about this particular project in the upcoming slides. So that was about a quick overview of the company. Now coming to financial performance of the company during the year 2023. Our total assets as on 31 December 2023 stands at QAR 3.82 billion compared to QAR 3.47 billion as on 31 December 2022. Of this, the current assets are QAR 593.14 million and noncurrent assets QAR 3.22 billion. Total current liability is QAR 441.83 million, with a working capital of QAR 151.31 million. Total equity of the shareholders stands at QAR 1,858.84 million. Our gross income during the year was QAR 492.37 million and then we had other income of QAR 91.15 million, and we posted a net profit of QAR 163.04 million, which gives earnings per share of QAR 0.34 compared to QAR 0.32 last year. Our net book value per share stands at QAR 3.91 per share. And the equity attributable to noncontrolling interest stands at QAR 51.32 million. As you can see, the total revenues has dropped slightly compared to 2022. It is QAR 492 million compared to QAR 621 million. However, we posted a net profit of QAR 163.04 million, just little higher than the net profit posted last year, which was QAR 152.13 million. The lower revenues, particularly on front of KJL Organic Qatar and Sand Treatment plant. This is a quick overview of the changes between last year and this year in terms of profit and other costs. As we can see, among subsidiaries, KLJ Organic Qatar, Sand Treatment Plant, Qatar Paving Stone and Taabia reported lower net profits among the subsidiaries and partially offset by higher profits from Qatar Acids and Q-Coat. Among associates, Q-Jet, Gulf Formaldehyde, Gasal and Amiantit posted higher net profits while Qatar Plastic and Wood Products and QALEX have slightly underperformed. Then we have sales and distribution and other expenses lower, largely in line with the declining volume and revenue. Finance costs higher due to higher interest rate. And nonoperational gains include profit and sale of shares and tax exemption refund from some of the associates. So total assets as on 31 December 2023 stood at QAR 3.82 billion compared to QAR 3.47 billion. Total equity QAR 1.91 billion compared to QAR 1.82 billion as on 31 December 2022. [indiscernible] assets due to progress in real estate, mainly in real estate project. Total equity higher on account of retained earnings. Our earnings per share was QAR 0.34 per share compared to QAR 0.32. The return on assets was 4.47%, which is slightly lower than 4.57% which we had in last year. An update on the Gulf Glass Factory. The construction is complete. The plant building is being ready for occupation. We have received all the shipments of the machinery and other relevant equipment, 63 shipments, including 304 containers. The plant will be commissioned starting on the second half of February, this month, all of testers and commercial production. Commissioning and testing will start in mid-February and go until 31 March 2024. We expect the commercial production to start by end of second quarter 2024. Some update on the real estate project. A lot of work has happened. Tower joinery works going on. In all the fronts, we have reached the last stage of finishing. You can see the profile of the company, building from different angles. We are getting ready for commissioning and launch. We have to some photographs from different parts of the hotel, Persian restaurant, meatery, lifestyle café. So we have reached the last stage of this project, and hopefully, this will be launched very soon. So that's all about our performance and updates regarding our important projects. So if you may allow, I would like to stop sharing the presentation so that you can have a conversation and Mr. Aktham will take over from here for the Q&A session. Thank you very much.

Thank you, Surya. I hope that this contact was so informative for you. And I assume that you have done homework or you have built up some [indiscernible] of questions that you would like to raise up on this table. The session -- the table is your. Please, anybody wants to raise any question, he's more than welcomed.

Yes, Mr. [ Zohaib ].

I have a few questions. Firstly, what will be your CapEx requirements for 2024? That's my first question. My second question is, how is the commissioning getting on for the glass factory? I mean, it's been, I think, now 3 months that it has been started. It started in September, if I am not wrong. So where have we reached the production capacity, utilization? Where do we stand? Any update on that? The third question is, are you still capitalizing any interest cost? And how much would be the interest cost that has been capitalized?

Yes, thank you. Very smart questions. Anybody is having any other questions, so I can answer all of them at once? Anybody having questions? Okay. Then we might address and interact with you separate and give another chance for the other gentlemen to come up with any question they might please. So speaking about the CapEx, you said -- so it's rough number, it's around QAR 300 million. And most of it is going for the tower completion. And the other part of it is for the glass. For -- speaking about the commissioning of glass factory, we are right now in the stage of mechanical commissioning. So we are waiting for the hookup of connection for electricity. So we are expecting within 1 week or 10 days, the electricity would be connected to our factory and we'll start the mechanical commissioning. And we assume that by the beginning of -- or during, let's say, March, we will start the first bottle. The capacity, as you ask, is around 1 million bottle with 1 furnace, 1 million bottle a day with 1 furnace. And there is a provision also that we have done in the civil work for the second furnace. The decision has not been made, but it was in the master plan since we have invested in this project, that this project has to go only 2 furnaces, not 1 furnace, but one at a time. So by third quarter after we give a special time for the first furnace to run smoothly, we'll make a call for putting up another furnace to boost up our production by another 1 million bottle a day. And we will keep you updated once this kind of decision is being [indiscernible] at QIMC level. Speaking about the interest capitalizations. You are speaking, [ Zohaib ], about -- you are speaking about the projects. We are enjoying right now the grace period. The project has not been handed over right now. We are expecting that the project will be physically completed by May. And we assume that by June, we might start maybe migrating here as QIMC to move to our headquarter out there. And I think the grace period will end by this year. And still, we have not made the decision here regarding the interest capitalization during the grace period. Right now during the grace period, sorry, I'm saying that there's no interest being paid right now. But then we will make it decapitalized. But whether we are doing for another -- let's say, since the project has been delayed whether we are going to, again, to push, I mean, the first repayment another 1 year to expand, let's say, the grace period, this decision will be made by the end of this year. I hope that kind of, I mean, answers have satisfied you Mr. [ Zohaib ]. If you would like to interact with my reply you are most welcomed?

So the capitalization or the grace period is for which project, the tower project or the glass factory...

Tower.

Not for the glass factory?

We don't think that we are going to capitalize anything for the glass. Any other question by any gentlemen? So maybe I would like to say something again. Maybe I was assuming that [ Zohaib ] would raise these questions, but since I mean -- we pay a lot of respect, attribute the contribution of you, [ Zohaib ], and your organization always been there. And I would like to speak out what I have prepared myself for. I was expecting you to raise it is, what is 2024 going to look? Because you always ask this question. So my answer, I'm assuming that you have raised this question, is that the main driver for the domestic demand is the oil and gas plus government expenditures. So I mean, whenever there is a growth or there is, let's say, prospects in those 2 elements, there will be a hope for, let's say, more, let's say, demand domestically. So we are assuming, we think that 2023 and 2024 till this moment that we are speaking are going to look alike. Gentlemen, if there is no any other questions, allow me to call this session off. [indiscernible] do you have any questions? Yes, thank you, gentlemen, and we will see you for the results of first quarter. Okay, thank you.