Avaland ended 2023 on a strong note, delivering a RM608m revenue and RM63m core net profit, its highest since 2018. The better performance was largely driven by the better construction progress for its ongoing developments. In tandem with the higher revenue, full year 2023 EBITDA margin rose 1.1ppts YoY to 19.5% attributable to the better operational efficiency.
The group also pared down its total borrowings from AyalaLand by 52% compared to 2021 which resulted in significant finance cost savings which helped drove higher profit.
Unbilled sales and new launches to drive earnings
PhilipCapital said it projects a 2-year profit CAGR of 29% across 2023–25E driven by robust RM863m unbilled sales (1.4x 2023 revenue) with revenue visibility until 2025E. The house expects sales momentum to remain encouraging in 2024 underpinned by its sizable anticipated project launches amounting to RM1.4bn. This includes Amika Residences (RM452m), Anja Bangi (RM563m), and Aetas Seputeh (RM365m). Management targets a minimum 50% take-up rate for these
launches, translating to c.RM700m internal sales target. In order to sustain its earnings beyond 2025E, management is actively seeking for land banking opportunities in Klang Valley. In the long-term, PhilipCapital added it expects the developer to sustain its RM1.4bn annual project launches momentum.
Valuation
The house ascribes a RNAV-derived fair value of RM0.50 based on 25% RNAV discount (in line with the discount ascribed for our small-mid cap property coverage). The stock is trading at an attractive 0.5x PBV, as compared to 0.8x among others small-mid cap property peers. There is no formal dividend policy in place as primary focus is on land bank replenishments and reducing borrowings from Ayalaland. Key risks include lower-than-expected property sales, higher building material prices, and sluggish land replenishments.
