PETALING JAYA: Avaland Bhd
is expected to have stronger earnings momentum going into financial year ending Dec 31, 2024 (FY24), backed by the right products and strategies for its upcoming projects and land banking plans.
RHB Research said Avaland’s property sales are likely to reach between RM500mil and RM700mil in FY23 and FY24, respectively.
Its unbilled sales are predicted to increase to a peak of RM867mil in the nine months of FY23 as compared to RM720mil in FY22.
“Our FY24 and FY25 earnings suggest an earnings growth of 41% and 27%,” the research house stated in a report on the developer.
Going into FY24, RHB Research said Avaland, a real estate and property developer, is looking to acquire more land banks for niche development.
The group will also be launching Amika Residences in Subang Jaya, Anja in Bangi, and Aetas in Seputeh, with the projects expected to have a combined gross development value of RM1.33bil.
Formerly known as MCT Bhd, it changed its name to Avaland in July 2023 post-appointment of Teh Heng Chong as its new chief executive officer in March 2019 as well as the restructuring of the management team.
Teh is said to be the instrumental person in driving the restructuring.
After the major internal revamp, RHB Research said the group has started seeing a convincing earnings turnaround over the past two quarters.
Prior to this, Avaland had been overlooked by investors due to its dismal performance in recent years and the slowdown in the real estate market.
RHB Research stated that due to majority of building works completed by the group’s internal construction arm, there were a lot more flaws as well as higher rectification costs and overheads in the past.
Avaland has decided to place more focus on building brand equity by offering quality products for long-term growth sustainability.
RHB Research said one of the biggest shifts undertaken by Avaland in recent years has been the group’s outsourcing of the design, architecture and construction work for all of its projects.
Its net gearing fell to 0.15 times in the nine months of 2023 as compared to 0.23 times during last year.
In addition, its new projects have come with more refreshing designs, namely the Aetas Damansara, Alira Subang Jaya, Sanderling in Cyberjaya and Casa Embun in Cybersouth, and these projects managed to achieve a take-up rate of 97%, 83%, 74% and 71%, respectively.
“We believe management read the market correctly, given market preference for larger residential units post-pandemic.
“Aetas, which is a mid-high end project, rightly suits the current market demand,” it said.
RHB Research has put a fair value of 40 sen per share on Avaland with the valuation based on a 60% discount to its restated net asset value.
On a separate note, RHB Research said despite Teh resigning from his current position effective Jan 1, 2024, to be replaced by Avaland’s former chief operating officer Apollo Bello Tanco, Teh will still remain as a non-executive director on the board.
