AVALAND: Property Developer Navigates Transitional Period with Weaker Q3 Earnings, Future Prospects Remain Robust
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A local property developer experienced a softer third quarter for its fiscal year 2025 (3QFY25), reporting a net profit of RM8.1 million. This performance, which fell short of expectations, led to a year-to-date net profit of RM38.5 million for 9MFY25, representing approximately half of the full-year estimates.
Performance Review
The company’s 3QFY25 net profit saw a significant decline of 68.4% year-on-year and 21.7% quarter-on-quarter, primarily attributed to slower progress billings. For the nine-month period ended September 2025, revenue decreased by 34% year-on-year to RM439.1 million, with gross profit falling 25% to RM152.9 million. Pre-tax profit for the same period also saw a substantial decline of 50% year-on-year, reaching RM50.0 million. This subdued financial performance is largely due to a transitional phase, characterized by lower contributions from several completed projects and new developments that are still in their nascent stages of construction and revenue recognition. Pre-sales for 9MFY25 also recorded a decrease at RM618.5 million compared to RM683.7 million in the corresponding period last year, following the full completion and take-up of projects such as Aetas Damansara, Casa Embun, Sanderling 1, and Alira Subang Jaya.
Strategic Growth and Future Outlook
Despite the recent financial softness, the future outlook for the property developer appears promising. The company’s unbilled sales have shown an increase, rising to RM811 million from RM797 million a quarter ago. Significant pre-sales of RM618.5 million were secured in 9MFY25, with RM913 million worth of projects launched year-to-date. Management anticipates stronger subsequent quarters as construction on new projects accelerates. Furthermore, the company has expanded its landbank through strategic acquisitions, including a 2.2-acre parcel in Section 13, PJ (RM49 million) and a 3.2-acre parcel in Jalan Putra, KL (RM149 million). These acquisitions are expected to collectively add approximately RM1.4 billion in gross development value (GDV) to the Group. In total, the developer now holds about 184 acres of landbank with an estimated GDV of RM11.5 billion, slated for development over the next 7-10 years.
Analyst View
PublicInvest Research maintained its “Outperform” recommendation on the company, setting a target price of RM0.30. This valuation is pegged at approximately a 60% discount to its book value, aligning with industry peers, reflecting confidence in the company’s long-term growth trajectory despite short-term headwinds.
