BALANCED GROWTH

Kuwait 2019 | INDUSTRY & FOOD | INTERVIEW

QPIC's ability to achieve positive, consistent growth is a testament of its balanced portfolio of investments and business model.

Sadoun A. Ali
BIOGRAPHY
Sadoun A. Ali joined QPIC in 2012 as Vice Chairman & CEO. He has over 20 years of experience in finance and investment and was previously with KAMCO Investments Co. from 2006-2012 as Managing Director & CEO. He was also previously with Kuwait Projects Company (KIPCO) as part of the Executive Management and was Head of Accounting & Financial Group, and Chief of Budget (Mina Abdullah Refinery) in Kuwait National Petroleum Co. from 1989-1997. He is currently the Chairman of United Oil Projects Co. (UOP), Inshaa Holding Company and sits on the board of several local and regional banks and investments companies. He holds a BSc. in management of financial and accounting services from Ashland University, Ohio, the US.

QPIC achieved USD19.78 million in net profit in net profit in its nine months performance ended 31 December 2018 compared to USD18.01 million in 2017. What helped it attain such positive results?

Factors aside, QPIC's ability to achieve positive, consistent growth is a testament of its balanced portfolio of investments and business model to withstand economic and geopolitical challenges currently facing the globe; however, the primary factor influencing the announced nine months results of the financial year ending in March 31, 2019 was the upswing in commodity prices toward the end of the year, in particular the increase in the price of styrene. That is apart from the USD93.26-million share of dividends received from our investments in Equate Petrochemicals that have yet to affect our financial year-end results in March 2019.

What decisive factor is QPIC analyzing prior to investing in new ventures and established businesses?

There are a handful of aspects that QPIC looks at. To begin with, QPIC does not invest in new, greenfield ventures. Our investment strategy begins with an identification of established, profitable, obtain a high potential for growth, and cash-generating businesses within the industrial sector, firstly in Kuwait and subsequently in the rest of the GCC region. With regard to the decisive factors, QPIC only considers businesses that are market leaders in what they do, coupled with strong managements in place and a reputable partner. Finally, these businesses must be available at reasonable valuations. QPIC expects each new investment to be an accretive acquisition, which will increase QPIC's EPS, thereby generating a positive cash yield from day one and maximizing our shareholders' wealth.

In which sectors and region do you plan to invest in the near future to diversify QPIC's portfolio and balance the risk?

QPIC remains committed to Kuwait, and the company will continue to eye significant stakes in industrial companies that could benefit from Kuwait's long-term development plans. In addition, the company is open to suitable investment opportunities in other GCC countries.

What strategies are you considering or implementing to grow QPIC's presence in the MENA region?

Apart from its primary focus on Kuwait, QPIC constantly considers industrial investment opportunities within the GCC as well. However, with regards to the latter, the company's approach or strategy will be opportunistic in nature and remains conditional to finding attractive investments, available at suitable valuations with the right risk-to-reward profile.

How does QPIC help its subsidiary companies obtain new sources of financing to develop their activities?

All QPIC subsidiaries are debt free and have great potential for growth. In particular, Saudia Dairy & Foodstuff Company (SADAFCO) and National Petroleum Services Company (NAPESCO), our two major subsidiaries, are debt free, and both possess significant cash balances available to fund their respective growth plans. With reference to our smaller subsidiaries, QPIC continues to utilize its strong relationships with the banking community to assist the former in securing the required funding to finance their growth as and when required.

What are your expectations for the year ahead?

QPIC is well positioned and poised to close the financial year ended March 31, 2019 with excellent results. We expect to register a more robust growth vis-à-vis the previous year, reinforced by the superlative performance of EQUATE Petrochemical Company and the Kuwait Olefins Company. Conversely, the coming 2019-20 financial year is expected to be more challenging given the sharp market drop in commodity prices in the last few months. The current state of the Saudi economy could represent another challenge in this regard. Nonetheless, we are beginning to witness signs of improvement in the commodity markets and strongly believe the worst is behind us. A gradual recovery of the Saudi economy is expected to shed positive light on SADAFCO in the upcoming year.