- NIC Recorded KD8.7 million net profits and earnings per share equivalent to 11 fils.
- Total Assets Under Management (AUM) witnessed a 3% increase to KD1.121 billion.
On Tuesday, 21 March 2023, The National Investments Company held its Financial Analysts Conference for the fiscal year ending on 31 December 2022. The conference witnessed the positive participation of Mr. Girish Nair, NIC’s Chief Financial Officer; Mr. Bashar Khan, Senior Vice President – 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 2022, which proved that NIC was able to achieve stable financial performance, thanks to its strategy and dynamic diversification to achieve value aimed at providing sustainable returns and maximizing shareholder value. Mr. Girish Nair, NIC’s Chief Financial Officer, has presented a detailed report about the company’s financial position, emphasizing that the company has recorded a net profit of KD8.7 million and earnings per share equivalent to 11 fils. Through shareholders’ equity, the company’s comprehensive income has reached KD9.4 million, and the total comprehensive income reached KD18.1 million for 2022. During the comparative period of 2021, the company recorded a profit of KD24.4 million, a profit per share of 31 fils, and a profit of KD25.6 million as other comprehensive income. The total comprehensive income amounted to KD50 million. Mr. Girish pointed out that the return on average equity and average assets on a net profit basis amounted to 4.2% and 3.3%, respectively, during 2022, indicating that the leverage ratio reached 24.9% and the liquidity ratio reached about 56.3% during that period. And that the total assets and shareholders’ equity attributable to the parent company for 2022 amounted to KD271 million and KD198.8 million, respectively, compared to KD290.6 million and KD216.8 million, at the end of 2021. Earnings per share for the current year amounted to 11 fils. In line with NIC’s commitment to delivering consistent and positive returns to shareholders, the Board of Directors has recommended a dividend of 28 fils per share for the year ended 31 December 2022, through carry-forward earnings and part of the voluntary reserve, subject to approval by the General Assembly and other regulatory. NIC’s AssetsNevertheless, the company’s total owned assets and shareholders’ equity decreased by 7% to reach KD271 million compared to KD290.6 million at the end of 2021, while the company’s total assets under management increased to reach KD1.121 billion as of December 31, 2022, compared to assets of KD1.09 billion during the same period last year 2021, an increased rate of 3%. NIC’s Performance Presenting and analyzing the main drivers of NIC’s performance, Mr. Girish has referred to the total income during 2022, which amounted to KD19.9 million; a primary contributor to this is a dividend income of KD8.5 million as well as the management, brokerage, and advisory fee income of KD9 million. The total expenses in 2022 amounted to KD10.4 million, compared to KD11.1 million in 2021. Income from management, brokerage, and advisory fees grew by 19% to reach KD10.9 million by the end of 2022, compared to KD9.1 million during the same period in 2021. This growth was mainly driven by brokerage revenues of Al-Waseet Financial Business Company, with an increase of 11% and an increase in consulting fees and other income by 755%. Performance of NIC’s Main SectorsAt the conference, Mr. Girish also reviewed the achievements of NIC’s leading sectors. He stated that the MENA Securities sector had taken advantage of Boursa Kuwait’s new authorized tools, provided Market Maker service to 11 companies, and benefited from some investment opportunities by directing clients’ funds and portfolios toward qualified sectors and companies. This has led to achieving positive returns for the company’s investment funds.
Al Wataniya Fund has earned 3.05% returns; Mawarid, Al-Mada, Zajil, and Al- Darij have recorded returns of -1.84%, -5.09%, 3.00%, and 0.25%, respectively. The company’s portfolios have achieved a return above average by 3%, while the company’s local authorization provided a return of 8.9% as of December 31, 2022, and the rising interest rates have negatively affected the performance of equity markets.
Mr. Girish also shed light on the remarkable achievement of the Investment Banking Sector at NIC; it has played the lead coordinator role, listing advisor, and a joint placement manager and subscription agent in several listings, such as the listing of Ali Alghanim and Sons Automotive Company, covering more than 10.8 times the offering value, to be the fastest listing process in Boursa Kuwait’s Premier market. Also, the subscription to increase the capital of National Consumer Holding Company and Alrai Media Group, and the merger of Boubyan Petrochemical Company, Educational Holding Group, Safat Investment Company, and Capcorp Investment Company. Also, the company is in the final stages of negotiating an IPO, listing authorization for a Kuwait-based company, a sale and acquisition mandate for an oil and gas company in Kuwait, and a robust set of cross-sector proposals in Kuwait.
NIC’s Alternative Investments Department has invested in an Amazon facility and a real estate fund based on retail services assets in the United States of America. The company has also invested in several direct venture capital opportunities in a leading global financial technology company, Mezzanine investment for multi-family development in the United States of America, and other financial products. It continues exploring new investments and direct investment opportunities.
As for the Real Estate Investments Sector, it continued to work on increasing the collection rates and revenues of the real estate portfolio. The company achieved collection rates of 73% occupancy rates of 87% during the fourth quarter of 2022. The sector also launched the automated real estate system, increased the number of customers, secured new real estate portfolios, renewed several managed real estate portfolios, and continued the Al-Wataniya Resort management contract.
Mr. Bashar Khan, Senior Vice President of – Investment Banking Sector, said that NIC’s strategy focuses on four key elements to grow the business and enhance its competitive position, those are: building assets under management, utilizing technology, and attracting competencies, improving governance, and developing the investment banking leadership in the market segment.
Building assets under management works on three main initiatives, where advisory services are developed in a structured manner, focusing on venture capital and international real estate products. To achieve this, the company maintains a strong team and a group of professional bankers that can support growth; in addition, a solid reputation is being built to bring joint investment opportunities to the company’s investors, such as Boursa Kuwait, Kuwait Foundry, FINCO, and Amazon.
He went on to say that the second element of NIC’s strategy focuses on utilizing technology and attracting competencies; the company puts much effort into digital resilience and investing in the digitization of processes and the development of work environments; in line with that, NIC has launched new digital channels for customers such as online trading, customer platform, and WhatsApp customer relationship management application, while harnessing operational efficiencies through outsourcing processes and working with co-consultants to leverage their capabilities, knowledge, and experience.
The third element of our company’s strategy is improving governance, one of the key reasons behind upgrading NIC to the first market status on Boursa Kuwait, demonstrating our commitment to increasing transparency and control, in addition to updating our risk management framework to include quantitative and qualitative metrics in line with international best practices. Finally, the fourth element in the strategy is building and developing investment banking leadership in the mid-market segment of investment banking with a focus on medium-sized clients, where the company could attract new key clients, complete high-profile transactions, and build specialized teams in capital markets, mergers and acquisitions, and venture capital that were identified as key growth areas.
On the other hand, Bashar Khan shared many examples that reflect the company’s ability to seize opportunities and execute them in the market, such as Boursa Kuwait, which was an idea of investing in obtaining a strategically important asset with strong, recurring and sustainable cash flows, due to its leading position in the market. A controlling stake in Boursa Kuwait was acquired in February 2019. The company’s direct stake reached 14.4% since the acquisition as Boursa Kuwait underwent an IPO and listing process, and today’s market price has reached twice the purchase cost. The investment has achieved a total return of 9.67 times based on the current market values.
“Kuwait Foundry is another example,” added Mr. Khan, adding that the investment’s significance was to acquire the pricing asset with an intrinsic value much greater than the prevailing market value, where 20% was received in January 2019. The necessary work was done to achieve weight. Most of the company’s shares were recovered in this transaction with a total multiplier return of 1.22 times on a market value basis.
A third good example is Amazon Kitzingen, where NIC has financed this facility in Germany. The project has been leased for 15 years and is expected to generate a cash return of 10% over 15 months. A fourth case is a Mezzanine investment in Germany to develop the Amazon Contwig project, where the same developer of Amazon Kitzingen develops the project, which will generate a return of 11% over 12 months.
Concluding the conference, NIC has confirmed constant communication with customers and shareholders while keeping them informed of developments in the company through the quarterly analyst conference.