KUWAIT: National Investments Company held its Analysts Conference for the first quarter of 2022, on Wednesday, May 18th, which was attended by Girish Nair, NIC’s Chief Financial Officer, Bashar Khan, Senior Vice President – Investment Banking Sector, 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 2022, which reflect the company’s exceptional performance and strong operational achievements that led to maintaining and strengthening its financial position, high quality assets and its ability to achieve sustained growth, this is all due to the effective strategy and its competent and experienced team.
The company has announced a net profit of KD 15.4 million with earnings per share of 19.3 fils per share and other comprehensive income of KD 19.1 million through shareholders’ equity, which translated into a total comprehensive income of KD 34.5 million for the first quarter of 2022. During the comparative period of 2021, a net profit of KD 3.8 million with earning per share of 4.7 fils was reported, the other comprehensive income was KD3.1 million and the total comprehensive income was KD 6.9 million.
Girish added that the return on average equity and average assets reached 6.6 percent and 5.5 percent respectively during the first quarter of 2022, with leverage ratio of only 1:0.21 at March 31, 2022, and the company’s quick liquidity ratio was 50.5 percent. Total assets and shareholders’ equity attributable to the parent company increased to KD 328.6 million and KD 251.3 million respectively at the end of the first quarter of this year, compared to KD 228.6 million and KD 181.9 million at the end of the first quarter of 2021.
Income and expenses performance
Girish highlighted the company’s performance excellence with a total income of KD 19.9 million for the first quarter of 2022, compared to KD 7.1 million during the same period of 2021, which reflects a 180 percent increase. He also clarified that a key factor behind the increase in the company’s total income in Q1 of 2022 is the profit from financial assets at fair value through profit or loss of KD 16 million and a major factor that contributed to other comprehensive income is the increase in the value of Kuwaiti investments at fair value through other comprehensive income of KD 17 million.
Total expenses during Q1 2022, including impairments and provisions of KD 2.2 million, were similar to KD 2.2 million for the comparable quarter of 2021. Administrative expenses amounted to KD 2.1 million for the current quarter, slightly higher than KD 1.8 million in the first quarter of 2021. This increase was offset by a decrease in impairments and provisions from KD 0.2 million in 2021 to almost nil during the first quarter of 2022.
Girish also noted that income from management, brokerage and consulting fees grew by 69 percent from KD 1.48 million for the first quarter of 2021 to KD 2.49 million during the first quarter of this year, and the growth was through brokerage income from one of our subsidiaries, Al-Waseet Financial Business, which grew by 96 percent, and management fees from funds and portfolios that grew by 39 percent.
Total proprietary assets grew by 13 percent during the first quarter of 2022, which amounted to KD 329 million, compared to KD 291 million at the end of 2021, as a result of the increase in the fair value of the investments, through profit or loss, and financial assets at fair value through other comprehensive income. The fiduciary assets under management increased to KD 1.31 billion as of March 31, 2022, compared to KD 1.09 billion during the same period in 2021, an increase of 20 percent, which reflected on the company’s ability to provide efficient portfolio management services and solutions.
Girish added saying: “MENA securities sector was successful in seizing opportunities for company funds and customer portfolios, where the sector has developed detailed plans to take advantage of investment opportunities by shifting customer portfolios into attractive sectors across funds, portfolios and private equity portfolios to achieve positive returns. The outstanding performance of our investment funds has enabled us to offer distributions to unit owners of The Wataniya Fund at 5.5 percent, Darij Fund at 6.2 percent, Zajil Fund at 4.5 percent and Mada Fund at 3.6 percent, and on the other hand the MarketMaker service has been expanded to four additional companies in different sectors of the market.”
Girish went on to say that The National Investments Company continues to provide its advisory services, and is engaged in 2 major flagship pre-IPO deals including Ali Alghanim IPO which is expected to be completed in 2022 and is currently engaged in executing several advisory mandates on the sell-side and buy-side in multiple sectors including infrastructure, technology-backed, healthcare, food and beauty.
The alternative investment management has also successfully invested in several projects managed by leading global private investment companies, as well as a regional e-commerce platform, a delivery company and an international clothing company, while exploring new investment opportunities in the field of international real estate and direct investment openings, while evaluating current investments for potential exits. The real estate investment sector is working on developing and improving collection rates and portfolio revenues and achieved a rental collection rate of 95 percent, and maintained occupancy rates at 84 percent in the first quarter of 2022.
Bashar Khan, Senior Vice President – Investment Banking Sector said that the company’s strategy focuses on building managed assets, through the development of international real estate products and the initial focus on venture capital, in addition to obtaining excellent opportunities for joint investments, including Boursa Kuwait, Kuwait Foundry, FedEx Italia and Pantera Capital, and the implementation of high quality operations with special focus on medium sized customers, we have completed many key transactions, established specialized teams in the capital markets and completed mergers, acquisitions and venture capital that have been identified as key growth areas for the company, and we continue to develop digital channels for the company’s customers as well as enhance governance.
Studies and opportunity acquisition
Studies have demonstrated the company’s ability to identify opportunities in the market, including acquiring a controlling stake in Boursa Kuwait in February 2019, with a 14.4 percent share of national direct investments since the acquisition, Boursa Kuwait’s shares were also made available for public offering and listing, and the market price today has been more than double the cost of acquisition, achieving more than double gross return of 12.29 times (based on market values).
In addition to Kuwait Foundry’s study which complies with the acquisition of an asset with discounted pricing that has a substantial value much greater than the prevailing market value. The investment also provided a specific path to fair value, with a 20 percent stake acquired in January 2019 and actions taken to achieve fair value. Most of the equity in the transaction was restored and the total double return on the basis of market value was 1.28 times, as well as the study of investment in the logistics warehouse project in Italy leased to FedEx, a 15-year leasing contract was signed, and is expected to generate annual cash returns of 8 percent and a net internal return rate of 9 percent over 18 months.
Finally, the investment in a blockchain fund, managed by Pantera Capital, a leading company in this sector, to be the first company to provide a symbolic fund in its early stages and the first exclusive blockchain fund. At the end of the conference National Investments Company has confirmed that it will be in constant contact with its shareholders and customers to keep them up-to-date with any developments through the quarterly analyst conference.