AmInvest Research Reports

Stock Idea - 24 May 2024

Publish date: Fri, 24 May 2024, 10:38 AM
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Company Background. Avaland (formerly known as MCT) is a leading property developer in Malaysia, specialising in crafting a diverse portfolio of properties that cater to every market segment, from affordable and mid-market homes to premium luxury residences. Avaland is a subsidiary of Ayala Land, the largest property developer in the Philippines. As at 31 Dec 2023, the group owns 194 acres of land for development with unbilled sales of RM863mil. Currently, the total estimated gross development value (GDV) for ongoing and future developments is RM11.4bil.

Prospects. (i) Segmentalised property developments into 3 tiers: AVA Luxe for luxury, AVA Prime for middle-income and AVA Ria for affordable housing, to effectively cater to the diverse needs and demands of different market segments, (ii) Actively expanded its landbank with the recent acquisition of 3 strategic lands in Klang Valley with an estimated GDV of RM1.5bil. The group’s healthy net gearing ratio also allows for further acquisitions and continues to replenish its unbilled sales, enhancing future earnings visibility, and (iii) With a target of launching 4 new property developments in 2024 with an estimated GDV of RM1.4bil, the group is strategically positioned to leverage on improving market sentiments.

Financial Performance. In 1QFY24, Avaland posted a higher revenue of RM214.6mil (+2.8x YoY) with a PAT of RM21.2mil from just breaking even in 1QFY23. This was mainly due to the advanced construction work progress from the group’s ongoing projects, i.e. Aetas Damansara, Aira Subang Jaya, Casa Embun and Sanderling.

Valuation. Avaland is currently trading at an attractive FY24F P/E of 7x, which is lower than Bursa Property Index’s 15.4x. As a comparison, UOA Development, involved in property developments such as high-rise residential, commercial, industrial and mixed used properties, trades at a much higher FY24F P/E of 20.5x.

Technical Analysis. Avaland may rise higher after it closed above the key RM0.365 resistance and hit a new multi-year high a few sessions ago. With the 20-day EMA remaining above the 50-day EMA since a bullish crossover in early January, the uptrend may continue in the near term. A bullish bias may emerge above the RM0.365 level with stop-loss set at RM0.34, below the 50-day EMA. Towards the upside, near-term resistance level is seen at RM0.50, followed by RM0.55.

Source: AmInvest Research - 24 May 2024

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