United Development Company Q.P.S.C. (UDCD) Earnings Call Transcript & Summary

Good day, and welcome to the United Development Company Q3 2020 (sic) [ 2021 ] Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Roy Thomas. Please go ahead.

Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to United Development Company's third quarter 2021 financial results conference call. On this call from UDC, we have Maher Omar Naim, the Executive Director of Financial Planning; and Karim Farhat, the Financial and Business Planning Director. We will conduct this conference call with management first reviewing the company's results, followed by a Q&A. I will turn the call now over to Maher Naim. Go ahead, Maher.

Yes. Hello, everyone. I hope everyone is all right. Just want to give you a small introduction and a brief about the results of United Development Company for the first 9 months of the year 2021. The company has achieved a QAR 1.6 billion revenue as compared to QAR 849 million of last year -- same period last year, with an increase of 90%, which led to the net profit to be recognized -- where we have recognized a net profit of QAR 207 million compared to QAR 123 million of the same period last year, with an increase of 68%, while the net profit attributable to the equity shareholder of the company reached to QAR 179 million compared to QAR 96 million with an increase of 87%, and the earnings per share stood to QAR 0.051 compared to QAR 0.027 with an 88% increase. This is the financial results of the company in a very short and summarized manner and want to keep highlighting that UDC is working with the full speed to complete its development project as planned and to overcome, if any, issues with the development activity, which, currently, we don't have any major issues that would stop the development projects. And hopefully, everything will be as planned. Considering the market now, it seems the market is better recovering from what -- from the corona [indiscernible], the pandemic [indiscernible]. And hopefully, let's hope towards the beginning of 2022, all of us will forget what corona is and life will be back to normal from an economical, business, social life, on an overall perspective. And our revenue has increased significantly. This is mainly due to the substantial handover of units related to Al Mutahidah Tower, where this is our residential tower where it has been completed. And the handover have started from Q2 2021, which led to the increase in the residential sales revenue. I leave the floor to you. Should you have any question, myself and Karim will be able to answer all the questions.

[Operator Instructions] We'll take our first question from [indiscernible] Investment.

So my question is on the utilization or occupancy rates for the investment portfolio. So how much is -- what is the occupancy rate going to be for residential? And what is the occupancy rate of the commercial portfolio?

The question was not -- the voice was breaking. Did you hear it clearly, Karim? I was not able to hear it clearly.

No. No. No. Something occupancy.

Yes. Can you repeat the question, please?

My question is on the occupancy rate. So how much is the occupancy rate of the residential investment portfolio? And how much is the occupancy rate of the commercial portfolio?

Well, the occupancy rate within the standard norm, and it is within the current market situation. It's considered acceptable. We are not far from other real estate developer, taking into consideration the supply and demand and oversupply in the market. But our occupancy is very much considered acceptable on an overall basis.

[Operator Instructions] We will take our next question from Zohaib Pervez of Al Rayan Investment.

So in the presentation, you have your projects about -- which includes Porto Arabia, Medina Centrale, but I don't see the Mutahidah Towers leasing portfolio here. Are you -- I thought 240 units have to be leased out. Is that still not leased out or you have not included it in the presentation? What's the update on that?

It is -- we have started, but it's in the very early stage. That's why we have not included it. Maybe for the Q4, it will be included accordingly.

Do you have any -- what is the current leasing rate, I mean, the occupancy rate of those 240 units?

It's still under -- we are in the process of leasing it because we were concentrating on the sale and the handover to our client. So hopefully, the leasing will be materialized toward the Q4 of the year 2021. And so we would hope it would be within the [ acceptable ] range.

Okay. And on the handovers, so has everything been handed over or some units are still to be handed over?

Not all, but you can say a substantial number has been handed out.

Okay. My last question is considering you have QAR 5.5 billion in projects going on, what is -- how much debt from now on do you require to complete these projects?

All our debt -- all the debt and the funding is already secured, so -- for all these development projects. So before we start the project, the funding is secured accordingly. So whatever is the remaining will be remaining for the value of [indiscernible] to be executed.

Yes. That's what I wanted to have an...

Yes. So no additional debt will be taken for the QAR 5.5 billion [indiscernible] project.

So your current debt is QAR 4.42 billion at the end of September 30.

Yes. That's the outstanding amount.

No more -- that will be taken -- no more debt will be required for the completion of the projects?

There are already more utilization outstanding. Yes, there will be.

[indiscernible]

That's the debt. The funding -- yes, the funding is secured. [indiscernible]

I just wanted -- I wanted to understand how much more debt you will have to take -- it's secured. I understand it's secured, but I just wanted to -- I want to know how much you will have to take to complete the projects.

Well, it's a bit more complicated than this. If you go to our financial statements, you will see each that we have or each lending -- each banking facility that we have -- you would you would figure out what is our limit on each. But this is being -- the QAR 4.4 billion is -- it's a summation of multiple debt. Some of them are being repaid as we draw down. So the level will almost stay the same and go up slightly. But -- so you need to take into consideration our repayments from our mature projects, not all of them. The QAR 4.4 billion is not all for new projects. Some of them are for existing projects and corporate facilities. So the level of debt on debt-to-equity ratio, if you want to look at it going forward, I think this is a better way to present it. And currently, we are, I believe, at 40% and -- which is -- yes. I mean we still have leeway over there, but nothing majorly significant that will go above, unless we embark on a new project accordingly.

We'll move on to our next question from [ Mohammed Adel ] of [ Alpha East Investment ].

So I have another question on -- with the [indiscernible] have signed any agreement with the government for using its investment portfolio during the World Cup or before the World Cup because I remember [indiscernible] last year, there was the news that the government will be leasing some of the investment properties from the real estate developers within Qatar.

In [indiscernible], as all other major developers in the country being -- doing this, UDC is not an exception to this. And in [indiscernible], things will be materialized. And hopefully, we will be able to lease a certain number of our residential units to the Supreme Committee.

And we move back on to our next question from Zohaib Pervez of Al Rayan Investment.

There's an income tax that was charged in the third quarter. What is this related to this income tax?

As the note specified it, if you -- it is the note #25 if I'm not taken, the shares -- there is -- some of it -- the majority of it, it's a capital gain tax due to the acquisition of a minority share on one of our subsidiaries.

Qatar Cool one?

Yes.

Yes. Okay. And have you made the payment for the Qatar Cool acquisition? Or do you still have to make again?

Alas, we already made -- we disclosed it by August 15. Everything was done on that date. We are change -- [indiscernible] change, now we own approximately 91% as UDC in Qatar Cool.

And it appears we have no further questions over the audio at this time. I'd like to turn the conference back for any additional remarks.

There are no further questions. We'd like to thank UDC for the results update and look forward to speaking to you all for the final quarter results. Thank you.

Thank you all. Thanks a lot.

Thank you. Bye-bye.

Thank you. Bye-bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.