Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Aldar Properties PJSC (ADX:ALDAR, Financial) reported a 69% year-on-year increase in group revenue, reaching 16.5 billion AED for the first nine months of 2024.
- Net profit rose by 52% year-on-year to 4.6 billion AED, showcasing strong financial performance.
- The company successfully launched eight new developments in 2024, contributing to a 24% increase in group sales to 24 billion AED.
- Aldar's investment properties portfolio maintained a high occupancy rate of 95%, with the commercial portfolio at 97% occupancy.
- Aldar education recorded a 49% year-on-year increase in adjusted EBITDA, driven by higher enrollment and recent acquisitions.
Negative Points
- There was a significant drop in property development and sales margin during Q3, attributed to fewer land sales and project handovers.
- The hospitality and leisure portfolio experienced a 4% year-on-year decrease in adjusted EBITDA due to a one-off income recognized a year earlier.
- The company faces a high CAPEX commitment of approximately 20 billion AED over the next few years, which could impact cash flow.
- Aldar's logistics segment, while growing, is still a smaller contributor compared to other segments and will take time to significantly impact earnings.
- The company has not provided explicit guidance on CAPEX deployment, leading to uncertainty about future capital expenditure allocation.
Q & A Highlights
Q: Can you provide guidance on the expected capital expenditure (CAPEX) over the next few years?
A: We don't usually give explicit guidance on CAPEX, but we share detailed information on capital commitments in line with our debt policy. Our backlog is growing significantly, and we expect a windfall of profits between 2025 and 2027, which will be recycled into our investment business. This business is more capital-intensive compared to development, which is mostly funded through off-plan sales.
Q: With the adjusted Loan-to-Value (LTV) ratio now lower, should we expect it to ramp up to previous levels of 35-40%?
A: We will not increase LTV for the sake of increasing it. Our strategy is to deleverage the balance sheet. We will pay down debt when we have cash, saving on interest costs. Our debt facilities provide optionality to draw back as needed to fund the business plan.
Q: There was a significant drop in property development and sales margin in Q3. Is this a concern?
A: The drop is due to several factors, including handovers of around 800 units and fewer land sales compared to last year. However, there should be no concern over property development and sales margins. We have revised our guidance for development upwards, and next year is expected to be significantly stronger.
Q: How should we think about growth in the recurring portfolio moving into 2025?
A: The existing residential portfolio will be steady state, with growth from lease rollovers and rent increases. The commercial portfolio will see growth from lease renewals and higher rents. Retail will benefit from transformation and synergies, while logistics will grow significantly from a smaller base. Acquisitions will also contribute to the bottom line.
Q: Can you provide more details on the Mubadala joint venture, particularly regarding the retail assets?
A: The strategic partnership aims to consolidate real estate assets, particularly luxury retail, to avoid competition and enhance profitability. The combined NOI for the retail assets is around 500 million AED. The JV will be majority-owned and managed by Aldar, with significant upside potential from repositioning these assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
