National Investments Company Holds Financial Analysts Conference for its Q1 2023 results.
• The company recorded a net profit of KD1.1 million, 1.3 fils per share.
• Total assets under management reached KD1.090.
The National Investments Company held the Financial Analysts Conference for its Q1 2023 results on Sunday, 21 May 2023; the conference witnessed the positive participation of Mr. Girish Nair, NIC’s Chief Financial Officer, Mr. Bashar Khan, Senior Vice President of – Investment Banking Sector, Mr. Al Muthana Al Maktoum, Executive Vice President – Wealth Management Sector, who presented a brief about the company and shed light on the positive financial results achieved in Q1 2023, which proved that NIC had continued its sustainability approach and kept its financial position and high-quality assets. The company’s Q1 results were supported by the maintained operational processes through implementing mergers and acquisitions, sales and restructuring operations, and other advisory services.
The attained stability accompanied the achieved results despite adverse market fluctuations in the capital markets, both in Kuwait and the region, and the tightening of monetary policy measures adopted by central banks, as the Kuwait All Share Index recorded a decline of 3.3% during the first quarter of this year compared to an increase of 15.7% during the same period of 2022.
Mr. Girish has presented a detailed report about the company’s financial position, highlighting that NIC has recorded a net profit of KD1.1 million, 1.3 fils per share during the first quarter of this year, while pointed out that NIC witnessed a loss of KD7.1 million as another comprehensive income through shareholders’ equity. The total comprehensive loss reached KD6 million for the first quarter of 2023.
During the comparative period 2022, the company recorded a profit of KD15.4 million through the income statement and earnings per share of 19.3 fils. It achieved a profit of KD19.1 million as other comprehensive income. The total comprehensive income was KD34.5 million.
Mr. Girish also stated that the return on average equity and return on average assets based on net profit amounted to 0.5% and 0.3% during the first quarter of 2023, indicating that the leverage ratio reached 23.7%. The liquidity ratio reached about 28% during that period, and the total assets and shareholders’ equity attributable to the parent company for the first quarter of this year amounted to KD260.7 million and KD192.9 million, respectively, compared to KD328.6 million and KD251.3 million respectively during the same period of 2022.
The Company’s Assets
The total assets owned by the company and shareholders’ equity in the first quarter of 2023 decreased by 4% to KD260.7 million compared to KD328.6 million at the end of 2022, while the company’s total assets under management amounted to KD1.09 billion as of 31 March 2023, compared to KD1.31 billion during the same period of 2022.
NIC’s Performance
Mr. Girish presented and analyzed the main driving elements of NIC’s performance, where he referred to the total income during the first quarter of 2023, which amounted to KD2.1 million. The main contributing factor to the current year’s total income is the dividend income of KD3.2 million. And revenues from management, brokerage, and consulting fees amounting to KD2.3 million. The main contributor to the other comprehensive loss of KD7.1 million for the first quarter of 2023 was the impairment of GCC investments listed at fair value through other total income.
Mr. Girish also mentioned that the value of total expenses during the first quarter of 2023 amounted to KD1.2 million, compared to KD2.2 million during the same period of 2022. He also explained that during the first quarter of this year, income from management, brokerage, and consulting fees decreased by 6% to reach KD2.3 million, compared to KD2.5 million during the same period of 2022; the main reason for this decrease was a decrease in brokerage income from one of our subsidiaries by 33% and a decrease in management fees by 6%.
Performance of the Main Sectors
On the other hand, Mr. Girish Nair reviewed the key events during the first quarter of 2023 for some key sectors at NIC. He stated that the MENA Securities sector has managed to maintain its reputation in the market, mainly due to the exceptional performance of its two most significant funds during the first quarter. Two of the company’s investment funds achieved positive returns in the first quarter of 2023; Zajil Services & Telecommunications Fund earned a performance of 7%, and Mawarid Industrial and Petroleum Services Fund also recorded a positive interpretation of 2.2%. The company has continued to lead as a Market Maker since its inception in 2021, bringing the number of clients benefiting from its expertise to 11.
Mr. Girish addressed the performance of the Financial Advisory Services sector, which participated in a range of strategic initiatives that led to exceptional results, as well as taking part in the IPO of a leading financial services company, an automotive company, and also a logistics company in Kuwait, and carried out sales mandates for a company within the educational services sector and an oil and gas company in Kuwait, in addition to increasing the capital of a media company and acting as an independent investment advisor to merge several listed companies.
The company’s Alternative Investments team has completed two deals within the real estate sector; one included acquiring three warehouses in France, and the other was managing and finalizing an agreement to develop a project in the United States of America during the first quarter of this year. NIC has also worked on evaluating various investment opportunities within the industrial real estate sector and on diversified opportunities in venture capital funds and a company that is AI in the Middle East.
As for the Real Estate Investment sector, it is implementing asset management strategies that focus on renovating and renting the properties and improving operating rates to increase revenues and property value by monitoring market trends and tenant requirements and continue to improve collection and occupancy rates, with a collection rate of 77% in the first quarter of this year, while the occupancy rate reached 87% during the same period, as well as discussing the renewal of the Wataniya Resort management contract.
Business Development
Mr. Bashar Khan, Senior Vice President of – Investment Banking Sector at NIC, said that the company focuses on four strategic elements to grow the business and enhance its competitive position: building assets under management, enabling technology and competencies, improving governance, and developing banking investment leadership within the market sector.
As for building assets under management, which is built on three leading enterprises, where advisory services are developed in an organized manner, with a focus on venture capital and international real estate products, and for this the company is building a solid team by adding qualified bankers to support growth, in addition to building a solid reputation to bring joint investment opportunities to the company’s investors, such as Boursa Kuwait, Kuwait Foundry Company, Lidl France and The Farm.
Bashar Khan addressed the second element of the strategy, which is enabling technology and competencies, as the company focuses its efforts on digital flexibility, investing in digitizing operations, developing work environments, ensuring sustainable business growth, and adhering to the company’s digital strategy, which leads to many services, including online trading, the client platform, real estate system development, in addition to the digital subscription system service.
It also uses operational efficiencies through the execution of the deal, focusing on middle-income clients and building a team specialized in capital markets and debtor capital. Concerning enhancing governance, which is one of the elements of the NIC’s strategy, he pointed out that the company continues to improve the risk management framework to align with international best practices.
Seizing Opportunities
On the other hand, Bashar Khan presented several cases that serve as clear examples of the company’s ability to seize opportunities and implement them in the market, such as Boursa Kuwait, where the idea of investing was to acquire a strategically important asset with intense, frequent, and sustainable cash flows, due to its leading position in the market. A controlling stake in Boursa Kuwait was acquired in February 2019, and the company’s direct stake has reached 14.4% since the acquisition; Boursa Kuwait has undergone public subscription and listing, and the market price today is many times the purchase cost so far and the investment has achieved a total return multiplier of 8.9 times based on current market values.
The second case was Kuwait Foundry Company, where the significance of the investment was acquiring the investment asset, which has a substantial value much greater than the prevailing market value, where 20% was gained in January 2019, and the necessary work was done to achieve the deal. Most of the company’s investment share in this transaction was restored, as the total return multiplier was 1.3 times based on market value.
As for the third case, Lidl France, where we financed a lot to buy, rent and sell three properties in France, the properties were sold and rented by Lidl. The project will generate a cash return of 12% and a net internal return of 12% over 2.5 years. The fourth case is a mezzanine investment in the United States, where the project will generate a return of 11.5% over three years.
At the end of the conference, NIC affirmed its commitment to communicate with its customers and shareholders and keep them informed of developments in the company through the quarterly analysts’ conference.
