• Assets under management witnessed a 7.3% increase to KD 1.17 million

The National Investments Company held Financial Analysts Conference for its Q3 2022 results on Thursday, 17 November 2022; 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 Q3 2022, which reflect the company's outstanding performance and solid operational achievements that led into 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, experienced team. 

Financial Position

Mr. Girish has presented a detailed report about the company’s financial position and the outstanding performance achieved up until 30 September 2022; the company has announced a net profit of KD8.8 million, 11 fils per share, and another comprehensive income of KD5.8 million through shareholders' equity, translated into a total comprehensive income of KD14.6 million for the third quarter, compared to KD22.4 million generated during the same period last year, 28.1 fils per share, the other comprehensive income has reached KD20.9 million, and the total overall income KD43.3 million.

Also, Mr. Girish added that the return on average equity and average assets reached 4.3% and 3.5%, respectively, during the third quarter of 2022, while the leverage ratio was only 25.5% as of September 30, 2022, and the company's quick liquidity ratio was 41.2%.

Total assets and shareholders' equity belonging to the parent company has increased to KD258.6 million and KD195.2 million, respectively, in the third quarter of this year, compared to KD278.2   million and KD207.4 million at the end of the first nine months of 2021.

Mr. Girish indicated a decrease of KD3.2 million in net profit through the income statement and a reduction of KD2.5 million in other comprehensive income through shareholders' equity in the third quarter of 2022. Thus, the total complete loss reached KD5.7 million during the same period of this year due to the performance fluctuations witnessed by the markets due to macroeconomic developments and the tightening of monetary policy measures adopted by various central banks, as the Kuwait General Index recorded a decline of 4% during the third quarter.

The company's total income for the third quarter of 2022 amounted to KD17.2 million, mainly due to the dividends, which amounted to KD8.1 million, management, brokerage, and advisory fees, which amounted to KD8.3 million, in addition to that, the main contributor to other comprehensive income is to increase the value of investments priced at fair value through other total income which amounted to KD5.3 million.   

Expenses and provisions amounted to KD7.1 million in the third quarter of 2022, compared to KD6.3 million for the same period of 2021. Administrative costs amounted to KD7 million for the first nine months of this year compared to the same period in 2021, reaching KD5.4 million. This increase was mainly due to the merger of the new subsidiary and increased operations. The financing costs for the current nine months amounted to KD0.8 million, higher than the corresponding KD0.4 million last year. This increase was offset by decreased value losses and other provisions from KD0.2 million in 2021 to almost zero for 2022.

Income from management, brokerage, and advisory fees grew by 41% to reach KD8.3 million during the third quarter of this year, compared to KD5.9 million for the same period of 2021. The growth was through brokerage income from one of our subsidiaries, Al-Waseet Financial Business Company, which grew by 29%, management fees from funds and portfolios, which grew by 10%, and consulting fees and other income, which grew by 482%.

Total assets owned by investments decreased by 7.6% during the first nine months of 2022, reaching KD269 million, compared to KD291 million as of the end of 2021, mainly due to dividends for 2021.  Meanwhile, assets under management have increased by 7.3% to reach KD1.17 billion as of 30 September 2022, compared to KD1.09 billion by the end of 2021.

Notable Events

Mr. Girish added that despite market volatility, MENA's Priced Investment Sector had achieved positive returns, Mawarid has recorded 4.6% returns, Al Mada 3.42%, Al Wataniya Fund 1.94%, Zajil Services, and Telecommunication Fund 1.45% and Darij Investment Fund -0.1%. As for the portfolios, they achieved returns of 5-4%.

Market Maker service has been expanded by adding a new company, bringing the total number of companies to ten. Market Maker's transactions reached KD9.8 million during the third quarter of this year, with the market maker's trading value representing 10% of clients' trading volume.

Mr. Girish said that The National Investments Company continues to provide its advisory services, which included increasing the capital of the National Consumer Holding Company and Alrai Media Group during the third quarter of this year. NIC has played the investment advisor for the merger between Boubyan Petrochemical Company (K.S.C.P) and Educational Holding Group (K.S.C.P.C.), as well as the investment advisor for the merger between Safat Investment Company (K.S.C.P) and Capcorp Investment Company (K.S.C.C.). A new IPO and listing agreement was signed, and the advisory team has completed the final stages of negotiations on the IPO and listing authorization for a Kuwait-based company, as well as a sale and acquisition authorization for the Kuwait Oil and Gas Company, in addition to the preparation of several offers across few local sectors.

The Alternative Investments Department has also completed a deal with Amazon’s logistics warehouse project in Germany. This real estate fund focuses on retail services assets in the United States of America. It is in the final stages of evaluating financing several other projects, namely a financial technology company based in Egypt, an Amazon logistics warehouse project in Germany, a multi-family housing project in the USA, and several other financial investments, in addition to working on improving existing investments and exits.

Mr. Girish explained that the real estate investment sector continued to expand its customer base by attracting new real estate portfolios and renewing many managed real estate portfolios while achieving total occupancy rates in Al Wataniya Resort and other properties through a comprehensive marketing campaign. In addition to working on launching the electronic real estate system to raise the level of customer satisfaction, achieving an 85% rental collection rate, and improving occupancy rates by 89.5% in the third quarter of 2022 compared to 86.2%, this is in addition to kicking off Al Wataniya Resort’s development project.

Considerate Plans

Bashar Khan, Senior Vice President of– the Investment Banking Sector, said that the company’s strategy focuses on four components: building managed assets through working on critical initiatives and leading towards product development in a structured manner with a focus on venture capital and international real estate products.  The second component is enabling technology and efficiencies. Therefore we continue to invest and transform our operations and evolve our digital channels, such as the online trading service ‘NICTRADE,’ and establish a client-focused platform. The third component is strengthening governance; hence we continue to improve risk management to include quantitative and qualitative metrics in line with global best practices. Finally, the fourth component is leading the middle investment banking market to strengthen the company's position and continue to build its capabilities with a focus on medium-sized clients. Also, our team plays a vital role in executing pioneering projects in Kuwait and building specialized teams in Capital Markets (ECM), Debt Capital Markets (DCM), and Venture Capital (VC) to enhance the company's capabilities further.

Studies and Opportunity Acquisition

Mr. Bashar referred to some studies that indicate the company's ability to identify and utilize investment opportunities in the market. In February 2019, NIC acquired a controlling stake in Boursa Kuwait, and its direct investments have amounted to 14.4% since the acquisition. Bour’[sa Kuwait has also undergone an IPO and listing process, and today’s market price has reached many times the cost of the purchase, achieving a total multiplier return of 11.08 times (based on market values). Additionally, the Kuwait Foundry Company's investment study has focused on the acquisition of an asset with a discounted price and an intrinsic value much greater than the prevailing market value; the investment also provided a specific path to fair value, acquiring a 20% stake in January 2019, and taking measures to achieve fair value, most of the equity in the transaction was restored. The total multiplier return on a market capitalization basis was 1.27 times.

This is plus the investment in the logistics warehouse project in Italy leased to FedEx. The contract was signed for 15 years, expected to achieve an annual cash return of 8% and a net internal rate of return of 9% over 18 months.

Finally, the investment in Pipe Technology, a fintech company that provides solutions to its clients with unremitting sources of income, by obtaining the necessary capital without reducing their ownership while accepting new capital entry into their companies or forcing them to get external loans.

Mr. Bashar referred to the standards set by the company, which positively impacted the IPO of Ali Alghanim Sons Automotive Company, leading to positive and effective results for the company.

Concluding the conference, NIC confirmed being in constant contact with its shareholders and customers, keeping them informed of all the developments through the quarterly analyst conference.