(The Group’s Comments) Mannai Corp. Net Profit Down 20% to QR407.1 Million in 2018

Ø  Profits: Net profits dropped by 19.6% to QR 407.1 million in 2018, compared to QR 506.1 million for the previous year, with earnings per share of QR 8.92 versus QR 11.09 in 2017.

2018 fourth-quarter profits amounted to QR185.7 million, compared to QR229.3 million for the corresponding period of 2017.

The decline in profits in 2018 was due to the rise in financing costs by 83%, which amounted to about QR 318.2 million, compared to only QR 173.6 million at the end of 2017. The company uses bank loans to finance its acquisitions, which is a burden on profitability.

Ø  Comprehensive income: The total comprehensive income was about QR 300.69 million by the end of 2018, and the company recorded a revaluation loss of QR 108.4 million, compared to a revaluation profit of QR 151.03 million in 2017.

Ø  Revenues: Revenues for the year 2018 increased by 53% to reach QR 10,773.5 million, compared to QR 7,041.3 million for the previous year. Total profit (revenues - cost) increased by 46% to QR 2,585 million, versus QR 1,774 million in 2017. EBITDA amounted to QR 1,006 million, compared to QR 849.6 million for the year 2017, an increase of about 18.5%. The last index measures the company's ability to generate revenue before the cost of financing, consumption and amortization.

The operating index indicates that the company's results have improved in terms of higher revenues, gross profit and even EBITDA. However, interest costs, with a 50% increase in administrative and general expenses and an increase in depreciation and amortization during the year.

Ø  Assets: Increased by 12.4%, or QR 1,439 million by the end of 2018 compared to the previous year. This increase is due to the acquisition and purchase of new shares during 2018 at a total of QR 1,255.3 million financed by long term bank loans, which increased during the year by QR 1,304.7 million.

Ø  Dividend distribution: The Board of Directors recommended the distribution of cash dividend at a rate of 20% of the nominal value of the share (3.90% dividend yield), i.e.  QR2.00 per share, noting that the distribution ratio for 2017 was 40% per share.

Ø  Market ratios: The stock is currently traded at a PE multiple of 14.85 times and a book value multiple of 0.52 times.