Satyendra Pathak
Doha
The prospective acquisition of Elegancia by Investment Holding Group (IHG) is expected to ensure the long-term growth and profitability of the company, QNB Financial Services (QNBFS) has said in a recent report.
Recently, the report said, Investment Holding announced that Elegancia Group Holding has submitted a proposal to be acquired by Investment Holding through a share-swap.
Elegancia Group employs more than 20,000 employees and is engaged in healthcare services, general services, contracting and industrial sectors. Elegancia has also two upcoming hospitals, International Healthcare Center and the View Hospital the latter with 250 beds to be opened in 2022.
"Elegancia’s healthcare exposure could contribute notably to Investment Holding, both in terms of profitability and diversification away from the contracting business. Investment Holding’s board of directors has initially approved the proposal and initiated the due diligence of the target company. Once the study is finalised, it will be presented to IGRD’s extra-ordinary general assembly for the shareholders’ final decision.
"Eleganica’s financials, growth prospects and ultimately the share swap ratio for the deal will be the major catalysts for Investment Holding shares going forward. We maintain our accumulate rating on it,” QNBFS said in the report.
"We continue to like the company as a turnaround story. Since its IPO, Investment Holding has been going through a comprehensive restructuring process. The goal of this restructuring is to shift from an investment company to a private equity structure with a full management focus on Investment Holding’s subsidiaries. In order to achieve that, Investment Holding has had notable shifts in its BoD and top management ranks in recent years. The new management appointed after the IPO and the BoD are highly involved in Investment Holding’s subsidiaries, especially in terms of business generation and cost management.
"The new management is engaged in expanding the product range of the supplies and trading segment with high margin products. Moreover, management is also continuously evaluating cost-cutting opportunities, especially in terms of labour force rationalisation and rental cost reduction,” the report said.
As a result, the report said, Investment Holding’s general and administrative expense (G&A) declined to QR55 million after adjusting for one-offs in 2020 from QR75.7 million in 2018. On the M&A front, in the fourth quarter of 2018, Investment Holding purchased the remaining 39.6 percent minority stake in CESCO at QR193.5 million, increasing its stake to 100 percent.
Commenting on the half-year financial results of the company, the report said, "Investment Holding Group reported a net profit of QR4.8 million in the second quarter of 2021 as compared to a net profit of QR5.7 million in the second quarter of 2020 and a net profit of QR8.1 million in the first quarter of 2021. Our estimate for the second quarter of 2021 was QR9.3 million. EPS amounted to QR0.016 in the first six months of 2021 as compared to QR0.019 in the first six months of 2020.”
During the second quarter of 2021, the report said, the company recorded QR76.6 million in revenue, which is up 2.5 percent YoY but down 8 percent against the first quarter of 2021.
"We think, the company was adversely affected by the increased coronavirus counter-measures in the second quarter of 2021, which were nevertheless less stringent relative to the second quarter of 2020, when the industrial area was put under lockdown,” it said.
Doha
The prospective acquisition of Elegancia by Investment Holding Group (IHG) is expected to ensure the long-term growth and profitability of the company, QNB Financial Services (QNBFS) has said in a recent report.
Recently, the report said, Investment Holding announced that Elegancia Group Holding has submitted a proposal to be acquired by Investment Holding through a share-swap.
Elegancia Group employs more than 20,000 employees and is engaged in healthcare services, general services, contracting and industrial sectors. Elegancia has also two upcoming hospitals, International Healthcare Center and the View Hospital the latter with 250 beds to be opened in 2022.
"Elegancia’s healthcare exposure could contribute notably to Investment Holding, both in terms of profitability and diversification away from the contracting business. Investment Holding’s board of directors has initially approved the proposal and initiated the due diligence of the target company. Once the study is finalised, it will be presented to IGRD’s extra-ordinary general assembly for the shareholders’ final decision.
"Eleganica’s financials, growth prospects and ultimately the share swap ratio for the deal will be the major catalysts for Investment Holding shares going forward. We maintain our accumulate rating on it,” QNBFS said in the report.
"We continue to like the company as a turnaround story. Since its IPO, Investment Holding has been going through a comprehensive restructuring process. The goal of this restructuring is to shift from an investment company to a private equity structure with a full management focus on Investment Holding’s subsidiaries. In order to achieve that, Investment Holding has had notable shifts in its BoD and top management ranks in recent years. The new management appointed after the IPO and the BoD are highly involved in Investment Holding’s subsidiaries, especially in terms of business generation and cost management.
"The new management is engaged in expanding the product range of the supplies and trading segment with high margin products. Moreover, management is also continuously evaluating cost-cutting opportunities, especially in terms of labour force rationalisation and rental cost reduction,” the report said.
As a result, the report said, Investment Holding’s general and administrative expense (G&A) declined to QR55 million after adjusting for one-offs in 2020 from QR75.7 million in 2018. On the M&A front, in the fourth quarter of 2018, Investment Holding purchased the remaining 39.6 percent minority stake in CESCO at QR193.5 million, increasing its stake to 100 percent.
Commenting on the half-year financial results of the company, the report said, "Investment Holding Group reported a net profit of QR4.8 million in the second quarter of 2021 as compared to a net profit of QR5.7 million in the second quarter of 2020 and a net profit of QR8.1 million in the first quarter of 2021. Our estimate for the second quarter of 2021 was QR9.3 million. EPS amounted to QR0.016 in the first six months of 2021 as compared to QR0.019 in the first six months of 2020.”
During the second quarter of 2021, the report said, the company recorded QR76.6 million in revenue, which is up 2.5 percent YoY but down 8 percent against the first quarter of 2021.
"We think, the company was adversely affected by the increased coronavirus counter-measures in the second quarter of 2021, which were nevertheless less stringent relative to the second quarter of 2020, when the industrial area was put under lockdown,” it said.