NIC Holds Financial Analysts Conference for H1 2023 results.
The company presented stable financial results, which helped maintain its financial position and high-quality assets.
The National Investments Company held the Financial Analysts Conference for its H1 2023 results on Tuesday, 15 August 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 H1 2023, which proved that NIC had maintained its solid financial position and high-quality assets while continuing its sustainability approach.
This is all thanks to the successful company’s strategy, the expertise of the team, and the efforts made, which were accompanied by stable and positive results in the first half of this year, supported by maintaining operations through the implementation of a range of mergers and acquisitions, sales and restructuring, and various advisory services, despite the fluctuations in the capital markets locally and regionally.
Mr. Girish Nair, Chief Financial Officer at NIC, has presented a detailed report about the company’s financial position, stating that the company has recorded a net profit of KD4.2 million during the first half of 2023. Earnings per share are equivalent to 5.3 fils through the income statement, noting that NIC witnessed a decline of KD4.8 million as other comprehensive income through shareholders’ equity. The total complete loss reached KD0.6 million for the first half of 2023.
During the comparative period of 2022, the company recorded a profit of KD11.9 million through the income statement and earnings per share of 15 fils and recorded a profit of KD 8.4 million as other comprehensive income. The total comprehensive income was KD 20.3 million.
Mr. Girish pointed out that the return on average equity and return on average assets based on net profit amounted to 2.3% and 1.6%, respectively, during the first half of 2023, indicating that the leverage ratio reached 25.8%, and the liquidity ratio reached about 22.6% during that period. The total assets and shareholders’ equity attributable to the parent company for the first half of this year amounted to KD 243.6 million and KD 175.9 million, respectively, compared to KD 275.9 million and KD 200.9 million, respectively, during the same period of 2022.
“The total assets owned by the company and shareholders’ equity in the first half of 2023 decreased by 10% to reach KD 244 million compared to KD 271 million at the end of 2022, while the company’s total assets under management amounted to KD 1.078 billion, compared to KD 1.12 billion during the same period of 2022.” Said Mr. Girish
Analyzing the main driving elements of NIC’s performance, Mr. Girish clarified that the total income during the first half of 2023 amounted to KD 8.4 million and that the main contributor to the total revenue is a dividend income of KD 6 million and a management, brokerage, and consulting fee income of KD 4.6 million. The main contributor to the other comprehensive loss of KD 4.8 million for the first half of 2023 was the impairment of GCC investments listed at fair value through other comprehensive income.
Mr. Girish also mentioned that total expenses had reached KD4.2 million during the first half of 2023, compared to KD4 million during their first period of 2022. He also explained that income from management, brokerage, and advisory fees decreased by 18% to KD 4.61 million, compared to KD 5.63 million during the same period of 2022; the main reason for this decline was a decrease in brokerage income from one of our subsidiaries by 41% and a decrease in management fees by 15% offset by an increase in consulting fee income by 39%.
Main Sectors’ Performance
Reviewing the main events during H1 2023 for the company’s main sectors, Mr. Girish said that MENA Securities has gone on offering various investment services and products that cover the demand of different clients considering their investment goals and risk levels along with investment mandates.
It is worth mentioning that some of NIC’s investment funds have achieved good performance; Zajil Services and Telecommunications Fund reached an upbeat version of 12.76%. Mawarid Fund for Industrial and Petroleum Services Fund and Al Mada Investment Fund achieved a positive performance of 5% and 2.52 %, respectively. These results reflect the company’s ability to deal with market fluctuations effectively, in addition to the company’s continued provision of market maker service to 11 companies listed on Boursa Kuwait.
The Financial Advisory department has also offered robust operations that enhance management’s ability to add exceptional value to clients to achieve their goals, ranging from IPO to acquisitions, mandates, and sales, demonstrating the company’s strong position in building long-term relationships with clients.
NIC is currently preparing for the IPO of a leading financial services company, an automotive company, and an integrated provider of human resources and logistics solutions in Kuwait, in addition to several sales of side mandates, including to a leading provider of educational services, an oil and gas company in Kuwait, as well as a partial acquisition through a tender offer to a listed company. Work has been done to increase the capital of Al-Rai Media Group and Aleid Foods Company.
The Alternative Investments team seeks to search for real estate and direct investment opportunities to evaluate them and achieve attractive returns, as the team is currently working on establishing a real estate investment fund in Europe and America, which is in line with the company’s expected plan to confirm its stability and positive expectations.
The Real Estate Investment Sector remains following a strategy that focuses on renovating the properties, handling rent-related matters, and maintaining the high occupancy rates in the company’s properties, increasing revenues and property value. This is done by monitoring market trends and tenant requirements while improving collection and occupancy rates, as the collection rate reached 64% in the first half of this year. In comparison, the occupancy rate reached 92% during the same period, in addition to obtaining new contracts with the Kuwait Investment Authority to manage several of its properties. The renewal of the agreement for managing the Al Wataniya Resort was discussed.
Mr. Bashar Khan, Senior Vice President of – Investment Banking Sector, 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 creating 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.
On the other hand, Mr. 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. Based on current market values, a controlling stake in Boursa Kuwait has achieved a total return multiplier of 1.9 times.
Another successful project was acquiring Kuwait Foundry Company, where the necessary work to achieve a total return multiplier was 1.7 times based on market value. Additionally, Lidl France, another project we have financed to buy, rent, and sell three properties in France, generated a cash return of 12% and a net internal return of 12% over 2.5 years. The mezzanine investment in the United States has developed a return of 11% 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.