Ezdan Holding H1 2024: Despite a Sharp Decline in Rental Income, Reduced Expenses and Finance Costs Lead to Net Profit Growth

• The company's rental income dropped by 5% year over year.

• Ezdan Holding’s shares experienced an 11% decline during H1 2024.

• Despite a sharp decline in rental income, the company's net profit witnessed a notable increase, driven by a reduction in operating and general expenses and a significant cut in finance costs.

During the first half of 2024, Ezdan Holding saw a significant decline in its stock price, dropping from 0.858 riyals per share at the beginning of the year to 0.765 riyals per share by the end of June, marking an 11% decline.

Here are the key numbers:

• Rental Income: 866 million QAR vs. 915 million QAR in H1 2023 (a 5% YoY decline).

• Operating Profit from Main Operations: 745 million QAR vs. 779 million QAR in H1 2023 (a 4% YoY decline).

• Net Profit: 176 million QAR vs. 161 million QAR in H1 2023 (a 9% YoY increase).

• Earnings per Share: 0.0066 QAR/share vs 0.0061 QAR/share in H1 2023 (an 8% YOY decline).

Ezdan Holding, primarily focused on the real estate sector, generates most of its operating revenues from property rentals. In the first half of 2024, the company experienced a significant decline in rental income compared to H1 2023, resulting in a negative impact on net profit amounting to 50 million QAR. The data reveals a sharp decrease in revenues from the residential and commercial property rental segment, while the hotel and suites segment saw a notable increase in income. This raises questions about whether the overall revenue drop is due to a decrease in rental rates or the result of property disposals and portfolio restructuring.

The reduction in operating expenses helped partially offset the decline in rental income, contributing an additional 18 million QAR to the net profit. The primary savings came from reduced costs in utilities and sewage services. Additionally, general and administrative expenses decreased significantly, mainly due to a substantial reduction in professional fees. This reduction in expenses added another 12 million QAR to the net profit, highlighting the effectiveness of cost management strategies during this period.

A substantial decrease in finance costs resulted in a positive contribution of 64 million QAR to the net profit. However, foreign exchange fluctuations negatively affected the company's financial performance, leading to a loss of 14 million QAR. This contrast highlights the impact of financial management and external economic factors on the overall profitability of the company.