Good day. Welcome to the Mesaieed Petrochemical Holding Co. Q1 2022 Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Roy Thomas. Please go ahead, sir. Hello, everyone. This is Roy Thomas from QNB Financial Services. I want to welcome everyone to Mesaieed Petrochemical Holding Company's first quarter 2022 financial results conference call. On this call from Mesaieed Petrochemical Holding Company, we have Sami Mathlouthi, the Assistant Manager for Financial Operations, and Riaz-ur-Rehman Khan, the Head of Investor Relations and Communications. We conduct this conference call with management first reviewing the company results, followed by Q&A. I turn the call now over to Riaz-ur-Rehman Khan. Go ahead, Riaz. Thank you, Roy. Good afternoon. Thank you all for joining us. Hope you're all doing great. Before we go into the business and performance updates of MPHC, I would like to mention that this call is purely for the investors of MPHC. No media representatives should be attending this call. Please note that this call is subject to MPHC's disclaimer statements as detailed on slide number two of the IR deck. Moving on to the call on 26th of April, that is yesterday, MPHC published its results for the three-month period ended 31st of March 2022. Today in this call, we'll go through these results and provide you an update on key financial and operational highlights. We have structured our call as follows. At first, I will provide you with a quick insight on MPHC's ownership structure, its competitive strengths, overall governance structure by covering slides five till 10 and slides 40 and 41. Secondly, Sami will brief you on MPHC's key operational and financial performance matrix. Later, I will provide you with insights on the segmental performance. Finally, we will open the floor for the Q&A session. To start with, as detailed on slide number five of the IR deck, the ownership structure of MPHC comprises of 65.4% stake. The rest is in the free float held by various domestic and international corporates and individuals. QatarEnergy, being the main shareholder of MPHC, provides most of the head office functions through a service level agreement. Operations of MPHC's joint ventures are independently managed by their respective board of directors, along with the senior management team. In terms of competitive advantages, as detailed on slide number eight, all of the MPHC's group companies are strategically placed in terms of competitively priced and assured feedstock supply under the long-term arrangements. Solid liquidity position with a strong cash flow generation capability and presence of most reputed JV partners. Additionally, its partnership with Muntajat acts as a catalyst for its access to global markets. As detailed on slide 10, from competitive positioning perspective, MPHC ranks among top-tier companies in the regional chemical space across most of the matrices, and specifically leads the charts in terms of profitability margins. In terms of governance structure of MPHC, you may refer to slides 40 and 41 of the IR deck, which covers various aspects of MPHC's code of corporate governance in detail. I will now hand over to Sami. Thank you, Riaz. Good afternoon, and thank you all for joining us. Starting with macroeconomic environment, as detailed on slide 12, which remained uneven during the first three months of 2022, where demand for certain petrochemicals product slightly inched downward owing to seasonal effect and buyer caution on prices after reaching peak during last year. On the other hand, specifically during the latter part of first quarter 2022, supply side was affected amid Russia-Ukraine conflict, enforcing sharp rise in energy prices. For the three-month period ended 31st of March 2022, MPHC recorded a net profit of 443 million QAR, up by 17% compared to last period of last year, as detailed on slide number 16. The group's improved financial performance for the current period was largely attributable to improved product prices, which on average increased by 26%, and translated into an increase of 209 million QAR in the group's net earnings, as you can see on slide number 17. On the contrary, sales volumes declined by 14% versus same period last year, mainly driven by lower plant operating rates amid large scale turnaround carried at Q-Chem facilities during the current period. Decline in sales volumes translated into decrease of 129 million QAR in MPHC net earnings. On the operational performance, MPHC operations continue to remain robust and resilient with total production for the year reaching 245,000 metric tons. Current period production volumes declined by 13% compared to first quarter of 2021, which is mainly due to the larger turnaround carried at Q-Chem facilities. Moving on quarter-on-quarter basis, MPHC revenue inched higher by 3%, while net profit increased by 5%. Key contributors towards the improvement in revenue and net earnings was mainly linked to better sales volumes, which increased by 3%, amid higher plant operating rates. However, selling prices remained flat during first quarter 2022 compared to Q4 2021, as effects of higher energy prices were mainly offset by muted demand. On overall basis, our basic strategy will be to continue our focus on the strategic drivers of operational reliability in terms of continued improvement in efficiency and achieving cost optimization, which would enable the group to contain costs while making strategic investments for unlocking further growth potential. I will now hand over to Riaz to cover the segment performance. Thank you, Sami. Starting with the petchem segment, as covered in slides 22 to 26. Petrochemical segment reported a net profit of QAR 247 million for the first quarter of 2022, down by 1% versus first quarter of 2021. The marginal decline in profitability was primarily driven by lower sales volumes, which declined by 21%, as the segment carried out a larger scale turnaround at Q-Chem facilities during first quarter of 2022, which affected segment's production volumes to decline by 24%. Product prices improved by 23% and offset most of the negative impacts relating to the lower volumes. Selling prices improved mainly on account of continued momentum from positive macro drivers carried forward from the latter part of last year. On overall basis, segmental revenue declined by 4% versus first quarter of 2021. In terms of segment revenue by geography, as detailed on slide 25, Asia remains a main market for the segment, along with Indian subcontinent and Europe. Moving on to the chlor-alkali segment, as detailed on slides 27 to 31. Chlor-alkali segment reported a net profit of QAR 189 million for the first quarter of 2022, increased by 51% compared to the same period of last year. This notable growth was primarily driven by a significant improvement in the blended average selling prices, which increased by 40% versus the same period of last year, complemented by strength from end product industries like aluminum, polymers, and et cetera. Sales volumes marginally declined by 3% compared to the first quarter of 2021. On overall basis, revenue grew by 36% within the segment, while production volumes marginally rose by 5% versus the same period of last year. In terms of segment revenue by geography, as detailed on slide number 30, Indian subcontinent remains the main market for this segment. Now, we can open the floor for the Q&A session. Thank you. Ladies and gentlemen, if you would like to ask a question, you can do so now by pressing star one on your telephone. That's star one if you would like to ask a question. We will pause for a moment to allow people to queue. There are currently no questions in the queue at this time. Pardon the interruption. We do have a question. We will take our first question from Leszek Baranski from Millennium. Please go ahead. Thank you very much for this conference call. I wanted to ask a question based on one of the slides. I read on one of the slides that utility costs increased visibly. If you can elaborate a little bit, what kind of utility cost, whether it's gas or electricity, and how is it priced and how much it increased and what's the impact? Thank you. Well, utility cost, it's based on the ethane price that we are having at QVC. This is linked relatively in terms of contractual agreement with the providers, which is linked slightly to the end products. Hence, we have some bonus that we have to pay in case the final products reach some ceilings. That's the main reason for the additional utility cost. Okay. Utility costs, they've got similar linkage to product prices as fixed costs. Is that correct? Yes. This one is for the generation of the power plant that is used for the production of caustic soda and EDC products. It's linked in terms of, as feeds, it's linked to the final product. Yeah. Okay. Thank you. Coming back to this feedstock linkage, I guess in both segments, because here we've got both segments. We've got this chlor-alkali segment and plastic segment. Is this linkage between feedstock cost and final product blended well in the same way in both segments, or there are some differences? Yeah. It does work. I think in most of those kinds of products, there would be a link between the feedstock costs and between the final products. Okay. Thank you. You are welcome. Thank you. We will now take our next question from Nitin. Nitin, you are from QNBFS, please go ahead. Hi. Good afternoon, sir. Thanks for the presentation. On one of your slides, you have mentioned a turnaround-related CapEx peak beginning in 2022 to December, $132 million. I just wanted to know, this is going to be again for both the segments, chlor-alkali and petchem. At the same time, what is the likely increase in volumes which one could expect after all this turnaround? Let's start first with the turnaround. We had one turnaround in Q-Chem, which is in Q1 2022, and this one is a planned turnaround. This is one of the biggest turnarounds that we ever had in Q-Chem. The main reason for the turnaround is to make sure that the facilities are up to date, and then it is not to increase basically the production of the facilities, but to make sure that they are in line and then there are no issues to the continuity of those plants. We had 39 days of shutdown during Q1 2022 for QVC. The total cost was around from $100 million-$120 million, and that is only for Q-Chem I. We are not planning any turnaround for the other facility at the moment. The next turnaround will be for Q-Chem II, which is planned for 2026. Okay. Thank you. You are welcome. Thank you. We will now take our next question from Shabih Al-Avi from Al Rayan Investment. Please go ahead. Gentlemen, thank you for the presentation. Just following up on the last comment you made about turnarounds and shutdowns. What will be the other planned shutdowns coming in for this year? Is there anything in the call by segment? Okay. Thank you. We have for QVC, always we plan around 29-30 days per year for planned shutdowns. They are not turnarounds. This is mainly due to the aging of the facility. Out of those 30 days, we have used five days in Q1 2022, and remaining 25 days will be spread over the next quarters. This is the plan. The plan is around 30 days in total. For the other plant of Q-Chem II, we don't have any plan of shutdown. Okay. Thank you for that. You had recently announced a press release about putting up a new plant which will be using the VCM. Just wanted to know that will there be any more, if it is 100% VCM or you will be needing more gas to produce the chemical to make PVC? Has the gas contract been secured? Thank you for the question. The idea is basically to use 100% of the VCM that we produce. We have studied all the benefits that is relating to the PVC project, one of the main benefits is to reduce the hassle relating to the transportation of VCM and all the logistics around the VCM production and transportation. 100% of the VCM will be used in the production of the PVC. If we need maybe to add more, this will be studied at later stage. The 100% of the VCM will be used and we will secure the feedstock. Post the expiry of the contract. Just to add, these plants are integrated. VCM will directly move from the existing facilities towards the new PVC facilities. There is a proper integration among these facilities, they are just sitting next to each other. In terms of sourcing of the feedstock, as mentioned in the press release, the source of the feedstock for the PVC will be the existing VCM, the ratio is almost 1 to 1. Right. What sort of increment in margin you would be looking for with this integration? Well, at the moment, look, it's all dependent on the prices. However, there will be always a spread between the VCM and the PVC that will generate for the business. Anything that is additional and any spread that is additional on top of the VCM will be added value to the shareholder in QVC. Shabih, just to add the point there, the spreads are easily identifiable from the markets in the Bloomberg also. This is something which is very moving target always because these commodities where we operate, it's very volatile. On certain days, the spreads could be doing very well as compared to the other days where we will be having a margin squeeze. That's why it's intentional not to go as a company policy and discuss the spreads as well as the margins for something which is not there on the paper. As far as the trends you will see, we will obviously be following the market trends because the quantities which we are producing, we are the price takers from the market. That play will always be ending up linking it to the macro trends. Right. Thank you for that. That's all from my side. Thank you. We will now take the next question from Abdul Amin from QNB. Please go ahead. Hi. Thank you for the call and for the presentation. I just want to know the cost structure of different QVC and the pet chems. Is it how much is the feed cost and how is it related to the output selling prices? Is it similar to IQ, where output selling prices also affect the cost structure? Thank you. Different company have totally different cost structure and different feedstock prices. Basically, we cannot communicate the feedstock that we have. What I can confirm is that all different companies, they don't have the same cost structure. Amin, just to add what Sami has mentioned, there are two slides in the investor deck, slide number 26 and slide number 31, where you can easily find out the realized prices as well as the volumes. Based on that, it can be easily converted into the margin evolution. The intention to show those slides was to present to the investors and to support the investors in their decision-making from the margin evolution perspective. Thank you. Is output price related to cost structure as well, or it's not related at all? Well, if you look at There's another slide as well, which is comparing peers. You can see easily that MPHC is providing, I think it's number 1 in terms of EBITDA margin and in terms of net profit margin. Basically, that's showing that the cost structure in itself, it's very competitive compared to all the peers in the region. Yeah, that's okay. I'm just asking for a model. If I want to make a model, how could I structure the cost for these companies? I think we'll not be able to structure in details. We can provide only on big components, starting from EBITDA margin. Yeah, because the reason is that MPHC is not covered by any sell side analysts. There's no estimate before the company announces results like other companies in Qatar or region. If the cost structure is not clear, it's hard to model that for the company. No, as per the disclosure policy, these structures are very confidential because there is multiple parties are involved. There is the feedstock supplier, then there is MPHC itself, and then you have the JV partner who is sitting at the OpCo level. Then you have multiple JV partners. In Q-Chem's case, you have CPChem as your JV partner there. In terms of QVC, there is TotalEnergies are there as part of the JV arrangement. As a standard policy, we cannot go on granular level in terms of the cost structuring. Obviously, at the very high level, the cost structures comprises of a fixed portion and a variable portion. Beyond that, talking about the numbers and the numericals, unfortunately, it will be very difficult for us to discuss. As far as to comfort the investors, intentionally, we have put in these slides from competitive positioning perspective, from EBITDA margin perspective, as well as individual product pricing perspective, to support the case and to help the investors in case they are ending up making some models. We appreciate the effort and we appreciate that presentation there at least every quarter. Having said that, I would appreciate also some sell side research because we are buy side investors, and if sell side cover this company, it will give more visibility to the company. It will be more clear to investors what the estimates are before the results and what is happening in the company. Even IQ, at least there are some sell side analysts. Is it important for the management to make sure that some sell side analysts cover these companies, or it's not that important anymore? Firstly, on your question about IQ, this company is in a different silo, so I will not be commenting about IQ here. In terms of the sell side coverage, the company's idea is to promote the coverage as much as we can from material from our website, as well as by conducting these calls and attending different conferences. It is up to the sell side analyst when and how they want to cover the companies. From our side, we always keep ourself independent. We always approach them if they can independently cover the company, but we will not be ending up paying something to do a sell side coverage. This is not as per the policy. Thank you. Nobody's paying anything to sell side to cover the company. Information is available, I think, to the houses which will cover. I appreciate the effort for the presentation. Thank you. Thank you. Thank you. There are no further questions in the queue at this time. All right. If there are no further questions, we'd like to thank Sami and Riaz for the results update and answering all the queries, and look forward to speaking to you all for the next quarter results. Thank you. Thank you so much. Thank you. Thank you. Thank you all. In case anybody wants to have any further discussions about MPHC, please feel free to contact the QNBFS team or myself, and I'll be very happy to host you all for separate calls. Thank you very much. Ladies and gentlemen, that will conclude today's conference. You may now all disconnect.