- Revenue: AED10.9 billion, up 73% year-on-year.
- EBITDA: AED3.9 billion, up 61% year-on-year.
- Net Profit: AED3.3 billion, up 57% year-on-year.
- Effective Tax Rate: 4.1% in the first half.
- Aldar Development Sales: AED14 billion, up 21% year-on-year.
- Aldar Development EBITDA: AED2.2 billion, up 77% year-on-year.
- Cash Collection: AED4.4 billion in the first half, expected full-year range AED8 billion to AED9 billion.
- Overseas and Expat Buyer Sales: AED10.2 billion, 79% of total UAE sales.
- Group Development Backlog: AED39 billion, expected to move towards AED50 billion.
- Aldar Investments Revenue Growth: 30% year-on-year.
- Aldar Investments Adjusted EBITDA Growth: 20% year-on-year.
- Investment Properties Adjusted EBITDA: AED852 million, up 19% year-on-year.
- Occupancy Rates: 94% across the portfolio.
- Commercial Portfolio Adjusted EBITDA: Up 35% year-on-year.
- Retail Tenant Sales: Up 8% year-on-year.
- Retail Footfall: Up 16% year-on-year.
- Hospitality and Leisure Adjusted EBITDA: Up 8% year-on-year (excluding one-off income).
- Hospitality Occupancy: 73%.
- RevPAR: Up 10% year-on-year.
- Aldar Education Adjusted EBITDA: AED116 million, up 25% year-on-year.
- Enrollments: Up 27% in the first half.
- Aldar Share Adjusted EBITDA: AED155 million, up 160% year-on-year.
- Free Cash: AED3.6 billion as of the end of July.
- Undrawn Credit Facilities: AED7.6 billion.
- Adjusted EBITDA Guidance for Full Year 2024: AED6.2 billion to AED6.5 billion.
- Development Sales Guidance for Full Year 2024: AED29 billion to AED31 billion.
- Development EBITDA Guidance for Full Year 2024: AED4.1 billion to AED4.3 billion.
- Investments Adjusted EBITDA Guidance for Full Year 2024: AED2.3 billion to AED2.5 billion.
Release Date: July 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 significant year-on-year revenue increase of 73% to AED10.9 billion.
- EBITDA rose by 61% to AED3.9 billion, and net profit increased by 57% to AED3.3 billion.
- Aldar Development recorded strong performance with a revenue backlog reaching a record AED39 billion.
- Aldar Investments saw revenue and adjusted EBITDA growth of 30% and 20% year-on-year, respectively.
- The company maintains a conservative leverage profile with strong liquidity, including AED3.6 billion in free cash and AED7.6 billion in undrawn credit facilities.
Negative Points
- The property development gross margin was lighter than expected, partly due to limited land sales in the first half of the year.
- The hospitality and leisure portfolio experienced a slight decrease in adjusted EBITDA due to a one-off income recognized a year earlier.
- The residential leasing segment within Aldar Investments has shown weaker momentum compared to other parts of the portfolio.
- There is a need for significant refurbishment in the residential portfolio, which is currently dated.
- The company faces competition for land in Dubai, which could impact future land replenishment and development plans.
Q & A Highlights
Highlights of Aldar Properties PJSC (ADX:ALDAR) Earnings Call
Q: Your property development gross margin seems a little light compared to expectations. What should we think about the gross margin trajectory for the development business?
A: Last year, we had significant land sales with high margins. This year, limited plot sales have impacted margins. However, we are focused on optimizing costs and pushing prices at every launch to improve margins going forward. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Can you provide more details about the tower and hotel development near DIFC? Have you owned the site for a while?
A: We bought the plot last year for AED270 million. The site is very attractive, and we believe it could sell for twice the price today. The development will include a luxury hotel and branded apartments, expected to yield high returns. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Your tax rate appears lower than the statutory rate. Will it normalize by the end of the year?
A: The lower tax rate is due to depreciation deductions and transition rules for fair value of land. Additionally, operations in free zones like ADGM are not subject to corporate income tax, driving the effective tax rate down. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: How many units can the remaining land produce in the next five to seven years in both Abu Dhabi and Dubai?
A: The land bank can sustain us for the next decade at the current run rate. In Dubai, we need to compete for land, but in Abu Dhabi, we have a strong competitive advantage in procuring land. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Should we expect Aldar to spend another AED5 billion to AED6 billion on new acquisitions annually?
A: Our capital allocation includes land replenishment, development to hold, and recurring income. We remain committed to deploying AED5 billion on top of the AED7.6 billion for development to hold over the next three to four years. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: How are demand and absorption rates in Abu Dhabi and Dubai? Are the current sales levels sustainable into next year?
A: Demand remains strong in both markets. Despite fewer launches this year, sales were up over 20%. We expect to maintain this momentum, with a busier launch calendar in H2. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Why choose onshore for the new commercial office development in Dubai?
A: Onshore offers a competitive advantage with lower costs compared to free zones. The proximity to DIFC and high-quality specifications make it a highly sought-after location. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Are you satisfied with the performance of the residential leasing portfolio?
A: The residential portfolio is dated and requires refurbishment. We plan to add 3,000 to 4,000 new residential units to the leasing mix to improve performance. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: Can you share a breakdown of presales numbers between Dubai and Abu Dhabi for the second half?
A: Slide 19 in the deck provides the split. AED3.1 billion came from Athlon, AED1.8 billion from Al Marjan, and AED850 million from Haven. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
Q: What are the key drivers for the fair value gains reported in H1?
A: The top three drivers are ADGM, Al Maryah, and Yas Mall, all of which have seen significant improvements in occupancy and rental rates. (Faisal Falaknaz, Group Chief Financial & Sustainability Officer)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
