Qatar Economic and Business Insights (26. October 2021): GTA Launches Direct Payment Service with CBQK, QNB Group, Qatarenergy, H2Korea Sign Hydrogen Energy Cooperation Agreement

IQCD's bottom line rises 1.3% QoQ in 3Q2021, below our estimate – Industries Qatar's (IQCD) net profit rose 339.4% YoY (+1.3% QoQ) to QR2,099.9mn in 3Q2021, below our estimate of QR2,317.3mn (variation of -9.4%). The company's revenue came in at QR3,392.2mn in 3Q2021, which represents an increase of 113.3% YoY (+5.5% QoQ). EPS amounted to QR0.93 in 9M2021 as compared to QR0.19 in 9M2020. IQCD saw its net profit more than quadruple YoY to QR5.6bn in the first nine months (9M) of 2021, owing to greater consumer confidence and a robust global demand for downstream products. The group revenue improved 76% to QR14.1bn. The EBITDA increased by 161% to QR7bn. Blended product prices at group level grew 43% YoY, translating into an increase of QR5.3bn in net profits. Price increase was mostly linked to elevated market prices across all segments, with fertilizer segment reporting a contribution of QR2.8bn, petrochemicals QR1.8bn and steel QR0.7bn towards the overall improvement in profitability versus 9M2020. The petrochemicals’ net profit more than tripled YoY to QR2.2bn for 9M2021, primarily linked to improved product prices owing to better macroeconomic dynamics and supply scarcities. The profit improvement was also partially supported by the return of MTBE production to full scale, which was on a commercial shutdown for a certain period during the first half of this year. The blended product prices for the segment rose by 62% versus 9M2020, with polyethylene (LDPE) prices showing a marked improvement of 67%. Sales volumes improved by 6%, compared to the same period of last year, on account of improved production levels which also increased by 6%. The growth in product prices coupled with inclined sales volumes led to an overall increase in revenue by 72% within the segment, to QR4.7bn for 9M2021. The fertilizer segment’s net profit jumped more than five-fold YoY to QR2.8bn for 9M2021, primarily driven by topline growth where revenue more than doubled for the nine month period of 2021, to QR6.5bn. Selling prices also improved significantly by 69% versus 9M2020, which reflected positively on the segmental performance and led to improved EBITDA margins. The restricted supply from key exporting economies, rising gas prices and production bottlenecks in some countries, together with strong demand from key crop-growing regions have been a driving force behind high fertilizer prices. Following the strategic restructuring initiatives implemented last year, the steel segment returned to profitability in 2021. Net profit amounted to QR629mn during 9M2021 compared with a net loss (including impairment) of QR1.4bn in the corresponding period of 2020. Selling prices improved by 31% compared to 9M2020, due to an increase in demand linked to a rebound in construction activity, IQCD said, adding the group now focuses on selling in more profitable domestic and regional markets on its current reduced production capacity. IQCD's financial position continues to remain robust, with the liquidity as at the end of September 30, 2021 reaching QR13.4bn in the form of cash and bank balances, after accounting for a dividend payout of QR2bn for 2020. Currently, the group has no long-term debt obligations. Its total assets and total equity reached QR39.7bn and QR37.4bn, respectively, at the end of September 30, 2021. During nine- month period, the group generated positive operating cash flows of QR6.2bn, with free cash flows of QR5.6bn. (QNB FS Research, QSE, Gulf-Times.com)

QIIK's bottom line rises 8.8% YoY and 12.4% QoQ in 3Q2021, in-line with our estimate – Qatar International Islamic Bank's (QIIK) net profit rose 8.8% YoY (+12.4% QoQ) to QR295.9mn in 3Q2021, in-line with our estimate of QR280.8mn (variation of +5.4%). Total income from financing & investing activities declined 5.7% YoY (-10.4% QoQ) in 3Q2021 to QR522.1mn. The company's total income came in at QR586.8mn in 3Q2021, which represents a decrease of 6.1% YoY (-10.2% QoQ). The bank's total assets stood at QR58.8bn at the end of September 30, 2021, down 0.8% YoY (-5.8% QoQ). Financing assets were QR37.4bn, registering a fall of 4.6% YoY (-8.1% QoQ) at the end of September 30, 2021. Customers' current accounts rose 5.9% YoY and 3.9% QoQ to reach QR8.1bn at the end of September 30, 2021. The earnings per share amounted to QR0.2 in 3Q2021 as compared to earnings per share of QR0.2 in 2Q2021. QIIK posted a net profit of QR840mn in the third quarter, representing an increase of 7% compared to 3Q2020. The results were announced after a meeting of QIIK’s board of directors chaired by his Sheikh Dr Khalid bin Thani Al-Thani in Doha. Sheikh Dr Khalid commented, "The 3Q results show that the bank’s growth is accelerating, as we continue to achieve the targeted results, focus on the implementation of our interim and strategic goals and report outstanding performance, thanks to the efforts we put into enabling a work environment that is conducive to innovation and development. QIIK Chief Executive Officer, Dr. Abdulbasit Ahmad Al-Shaibei stated, “The Bank delivered strong performance in the third quarter, as total revenues grew to QR1.85bn compared to QR1.83bn in the same period last year. Total assets stood at QR58.8bn, while financing assets reached QR37.4bn by 3Q2021. “Customer deposits grew by 9.3% to QR39.3bn in third quarter. Furthermore, operational efficiency continues with cost/income ratio at 18.7%, compared to 20% in the same period last year. This demonstrates that the bank's efforts in facing continuous risks and operational challenges have successfully paid off. "At the end of the third quarter, total equity had reached QR8.6bn and the capital adequacy ratio was at 16.6%, exceeding regulatory requirements, which highlights the strong financial position of the bank. "These results are a testament to the efforts made by every member of our team and the exceptional work carried out in dealing with the challenges imposed by the Covid-19 pandemic”, he said. “We continue to succeed in achieving positive business results in line with our strategic goals amid all the challenges, owing it to collective efforts of our employees. We look forward to more success and growth together." (QNB FS Research, QSE, Gulf-Times.com)

AKHI posts 37.5% YoY increase but 9.6% QoQ decline in net profit in 3Q2021 – Al Khaleej Takaful Insurance Company's (AKHI) net profit rose 37.5% YoY (but declined 9.6% on QoQ basis) to QR10.1mn in 3Q2021. EPS amounted to QR0.17 in 9M2021 as compared to QR0.11 in 9M2020. (QSE, QNB FS Research)

QGMD discloses the resignation of a member of the board of directors – The board of directors of the Qatari German Company for Medical Devices Company (QGMD) approved the resignation of the member of the board of directors representing of the AL Watania International Holding Company (Ihsan Walid Al-Khiyami) elected in the ordinary general assembly meeting on March 28, 2021, based on the desire of the Al Watania International Company holding. The company's board of directors and the executive management extend their sincere thanks and appreciation to Ihsan Walid Al-Khiyami - representative of the Al Watania International Holding Company - for all his valuable efforts and effective contribution during his term of membership in the Board of Directors (QSE)

Indonesian Deputy FM visits Baladna to explore possible collaboration – Indonesian Deputy Foreign Minister Mahendra Siregar paid a visit to Baladna on Friday. The purpose of the tour was to explore how Baladna’s business model might be replicated in Indonesia. The delegates toured Baladna’s state- of-the-art processing plant and dairy farms, followed by a presentation on the company’s international expansion plan for Malaysia. Further discussions between Baladna and the Indonesian government are expected to explore the possibility of developing fully integrated dairy farms (grass-to-glass) in Indonesia. Foreign countries interested in being dairy self- sufficient have expressed strong interest in Baladna. Earlier this year, Baladna signed memorandums of understanding with the governments of Malaysia, Ukraine and Kazakhstan to explore the feasibility of exporting its business model to those countries. The Indonesian delegation was impressed by the high quality standards of the Baladna farm. They were impressed with the air-conditioned barns for cows, high-tech processing plant and the company’s plans to expand its portfolio of food products in the market, a press statement noted. Baladna Managing Director Ramez Al-Khayyat said, “These kinds of conversations with fellow nations like Indonesia demonstrate that Baladna’s fully integrated model is a worldwide benchmark of expertise and quality. A model that can be replicated to achieve food security in other nations.” (Gulf-Times.com)

GTA launches direct payment service with CBQK, QNB Group – The General Tax Authority (GTA) in cooperation with Commercial Bank of Qatar (CBQK) announced the launch of a direct payment service from the taxpayer's account to the authority's account, in order to facilitate the payment of tax obligations to the bank's customers, and within the framework of the GTA to strengthen its electronic service system for the taxpayers. Particularly, with a focus on the field of electronic services. The authority explained in a statement, that this announcement came to confirm its commitment to providing electronic solutions that would contribute to the success and facilitate the payment of tax obligations for CBQK customers. The GTA stressed that it attaches great importance to the corporate sector, seeks to provide smart solutions, and is always keen to develop its services and business to keep pace with the latest updates and developments in line with the taxpayers, to enable them to obtain tax services commensurate with the type and nature of their commercial activity, and contribute to supporting their businesses in an easier way and secure through new electronic channels and take benefit of modern technology. The General Tax Authority also launched in cooperation with QNB Group, a direct payment service from the taxpayer's account to the authority's account to facilitate the procedures for paying tax obligations for the bank's customers, within the framework of the GTA's keenness to strengthen its online system for taxpayers – focusing on e-services in particular. (Gulf-Times.com)

Al Asmakh Facilities Management and A to Z Services announce merger – Al Asmakh Facilities Management and A to Z Services have jointly announced their intention to merge and create one of the largest integrated facility management groups in Qatar. The merger will result in a combination of eight individual entities, of which four are being contributed by Al Asmakh Facilities Management and four by A to Z Services. The combined entity will be named Al Asmakh A to Z Services and will benefit from significant synergies, creating value for its clients, its employees and all stakeholders. Ibrahim Hassan Al- Asmakh will act as chairman of the group, while Sheikh Ahmed bin Hamad bin Ali Al-Thani will be appointed as Vice Chairman. (Gulf-Times.com)