Tabreed 2009Q2 profit Dh19m -18%

[sharewadi]

[edit] Tabreed press release figures do not properly state net profit due to shareholders so calculations in this post are incorrect. See third post for updated calculations based on Tabreed financial statements. Have updated topic title to reflect correction. [/edit]

Tabreed (TABREED) announced 2009 H1 results today (press release in next post), a net profit of AED 57.6m, up 12% from AED 51.4m in 2008 H1. Figures for 2009 Q2 not obvious from press release but if they made AED 21.7m profit in 2009 Q1 then that means they did AED 29.3m for 2009 Q2, up 25% from 08Q2. (see Tabreed 2008 Q2 profit).

Tabreed shares closed at 0.93 today which implies an annualised PE of about 9.7 for 2009. Not at bargain levels compared to other stocks but not so expensive either, especially considering Tabreed shares were trading at much higher PEs in the past. Tabreed shares fell about 4% today I think (the DFMGI was also down a bit over 4%).

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[sharewadi]

Tabreed 2009 2Q results press release. They are an Abu Dhabi based company? I thought they were based in Dubai ? Hmmm, their website says they're based in Abu Dhabi. Odd they're listed on the DFM then no?

Press Release 12 August 2009:

Tabreed issues second quarter 2009 consolidated financial results National Central Cooling Company PJSC, (TABREED) the Abu Dhabi-based utility company released its second quarter 2009 consolidated financial results today. For the six months ending 30 June 2009, total revenue increased by 22% and gross income increased by 12%. Before certain non-cash finance costs associated with the company's 2011 Convertible Sukuk, consolidated net income increased by 12% over the same period inline with gross income. The increase in gross income was largely due to an increase in billing capacity while delivering improvements in plant efficiency. After the mark-to-market non-cash finance costs, reported consolidated net income fell by 4% over the same period in 2008. Financial Highlights - Six-months ending 30 June 2009: • Total revenue increased by 22% to Dhs373.8m, compared to Dhs307.6m in the same period in 2008 • Gross income increased by 12% to Dhs170.9m compared to Dhs152.5m in 2008 • Net income increased by 12% to Dhs57.6m compared to Dhs51.4m in the same period in 2008 • Due to a non-cash finance costs (mark-to-market) associated with the 2011 Convertible Sukuk, reported net income fell by 4% to Dhs47.4m compared to Dhs49.5m in the corresponding period of 2008 • Chilled water revenue for the period was Dhs148.2m, a 21% increase over the same period in 2008. This is attributable to an increase in chilled water sales as new plants came on stream and as seasonal demand increased. Total sales increased by 21,725 tons (10.3%) compared to the first half of 2008 • Basic and diluted earnings per share were stable at Dhs0.02 per share Sujit S. Parhar, Tabreed CEO commented: "During the first six months of 2009 there have been a number of significant management, operational and process changes at Tabreed. In particular, a strong emphasis is being placed on increasing operational efficiencies to enhance the yield that we derive from the assets we've invested in over the last 11 years. These changes reflect the mandate of the Board of Directors to better align Tabreed's business strategy with the infrastructure demands of Abu Dhabi. However it is important that the business continues to deliver solid results through this transitionary period. I believe the results we have just announced demonstrate the strong fundamentals of our business and the commitment of all of our employees to improve performance. The changes that we are implementing are not yet fully in place but I am confident that once complete, they will position the company to continue to improve performance and deliver on the expectations of our shareholders." Steve Ridlington, Tabreed CFO added: "Given the difficult economic climate of 2009, Tabreed's first half results, which show a 22% increase in revenues and a 12% increase in underlying net income compared to last year, represent a significant achievement. We are particularly pleased about the improving results from our chilled water business as new capacity comes on stream. This will deliver long term and stable revenues for the company's future. However, the remainder of 2009 will be challenging for Tabreed reflecting the continuing difficult trading conditions. Our focus must continue to be on the fundamentals - safeguarding our customer base, delivering the pipeline of new projects, and securing long-term financing to enable us to meet the region's infrastructure demands." Finance: During the first half of 2009 Tabreed was successful in securing an Dhs368m Ijara financing from Abu Dhabi Commercial Bank and renewing an Dhs147m facility with BNP. In early July 2009 the company secured a new Dhs750m facility with First Gulf Bank. The first tranche of this loan was drawn in July. Corporate Highlights: During the second quarter 2009 Tabreed made a number of changes to its senior management team including the appointment of Sujit S. Parhar as CEO in May 2009, Steve Ridlington as CFO in April 2009 and the appointment of a new Projects Director, HR Director, Corporate Communications Director, and IT Director. Three new district cooling plants online came online during the period, adding 16,595 tons of new cooling capacity from the following projects: • UAE University, Al Ain, 2,877 TR • Al Khoor Towers, Abu Dhabi, 7,418 TR • Aldar, Abu Dhabi, 6,300 TR Tabreed had 17 district cooling plants under construction during the second quarter of 2009 including six in Abu Dhabi, 10 in Dubai, and one in Fujairah. Highlights of construction progress the company made during the period include: • Yas Island Plant 1, commissioned in July 2009 • Tabreed 7, serving the military, to be commissioned in August 2009 • Tabreed 8, serving the military, to be commissioned in October 2009 • Dubai Metro, six plants to come online later this year As of 30 June 2009, Tabreed's total installed cooling capacity is 353,000 tons across 34 district cooling plants. The company expects nine further plants to come on stream in the remainder of 2009.

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[sharewadi]

Tabreed 2009 2Q profit fell to AED 19.2m dhs according to Bloomberg. Checking the Tabreed statements (on the DFM website) I see that there is AED 6.3m of Minority Interests which I hadn't allowed for. Press releases often don't account for Minority Interests and end up misrepresenting profit due to shareholders as a result. Bleah.

2009 H1 net profit after Minority Interests of AED 17m is AED 30.1m. I don't know where the Tabreed press release figure of AED 57m came from now. Double bleah. I give up

Based on Tabreed financial statements, looks like revised annualised PE is more like 18.5, and more in line with the high price Tabreed shares usually trade at. Just shows you how much difference Minority Interests can sometimes make.

Bloomberg 12 August 2009:

Tabreed Second-Quarter Profit Drops to 19.3 Million Dirhams By Shaji Mathew National Central Cooling Co. (TABREED), the United Arab Emirates-based refrigeration company known as Tabreed, said second-quarter profit dropped to 19.3 million dirhams from 23.5 million dirhams in the year-earlier period, according to a statement posted on the Dubai bourse Web site today.

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[sam111sam]

Profitabilty dropping Y/Y while sales are going up because of increased finance cost.

If we assume similar results for 2H, then we are looking a P/E 20. I would accept this from a start up company but not after 10 yrs of operations. If these shareholders (who paid 1Dhs per share 10 years back), would have bought anything else (land, commodities, shares,... anything) they would have been much better off now

With huge outrstanding debt, Tabreeb may not be able to pay any devidend for years to come

Either a bad managment or bad business model

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