Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Renaissance Services SAOG (MUS:RNSS, Financial) reported an increase in occupancy levels at Nison Village Dukum, with expectations to rise further by the end of the year.
- The company is actively pursuing M&A opportunities within Oman and the region, indicating a strategic focus on growth.
- Renaissance Services SAOG (MUS:RNSS) has a strong balance sheet with low leverage, providing room for further debt if needed for expansion.
- The company has secured a dominant position in the healthcare sector with contracts for soft services in major hospitals.
- There is potential for significant growth in the oil fields and Docom with upcoming projects and tenders, which could increase occupancy and revenue.
Negative Points
- The company experienced a drop in margins due to lower occupancy in high-margin segments and a shift towards lower-margin revenue streams.
- Regulatory hurdles and non-compliant accommodations have been a challenge, although improvements are noted.
- The Manazzel project has faced delays and cancellations, causing uncertainty in potential revenue growth.
- There is a risk of not retaining the current market share in Ministry of Health contracts due to upcoming retenders.
- The company faces market risks with fluctuating occupancy levels, impacting revenue stability.
Q & A Highlights
Q: Can you elaborate on the occupancy levels at Nison Village Dukum and the challenges faced, particularly with the green steel projects?
A: Occupancy averaged 5.9k for the quarter, an improvement from last year. We expect it to climb to 7.4k by year-end, contingent on green steel projects like Vulcan Steel with Jindal and others. These projects are pending gas allocation, which is beyond our control. We also anticipate military commitments that will positively impact occupancy. (CEO Steve)
Q: What is the EBITDA and net profit break-even occupancy for Dukum, and how are regulatory hurdles being addressed?
A: Dukum is operating positively with an EBITDA break-even at less than 3,000 occupancy and bed break-even around 7,500. Regulatory issues regarding non-compliant accommodations have been resolved, with non-compliant camps being shut down. (CFO Juma)
Q: What caused the drop in margins despite consistent revenue, and is this expected to continue?
A: The drop in margins is due to lower occupancy in high-margin segments like PDO and a shift towards lower-margin shared dormitory accommodations. This is seasonal and not indicative of fundamental issues. We expect margins to improve as occupancy levels rise. (CFO Juma)
Q: Can you provide details on the Manazzel tender and its potential impact?
A: The Manazzel tender has been restructured into two separate tenders. We have a strong position in the existing packs and expect to compete effectively for the new 10,000 beds. This could potentially double our current position in the interior oil fields. (CEO Steve)
Q: What is the strategy for foreign operations, particularly in Saudi Arabia and the UAE?
A: Our strategy focuses on targeted M&A to expand in the UAE and KSA. We have a profitable business in the UAE and are actively seeking opportunities for inorganic growth in these regions. (CEO Steve)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
