Robust operating performance, boosted by increased property sales and recurring revenue
The company posted revenue of AED 6,025mn for 4Q22, beating our estimate of AED 5,219mn, and in the process recorded an increase of 13% on a QoQ basis but a decline of 34% on a YoY basis on the back of continued improvement in property sales and a significant improvement in the performance of recurring revenue business. Dubai real estate market in particular, performed very well owning to the rebound in global tourism.
Substantial increase in profitability
The company reported a substantial increase in its gross profit, operating profit, and net profit of 8.6%, 21.1%, and 79.7% on a full-year basis. However, from a quarterly performance perspective, there was moderation in operating and net profit which decreased by 15% and 30% to AED 1,565.7mn and AED 1,042mn, respectively. Still, the net profit exceeded our estimate of AED 171mn. The growth in profitability could be attributed to continued improvement in the company’s sales, improvement in recurring revenue and cost control.
Maintain target price
There has been an improvement in consumer confidence and overall business activities, especially in the real estate sector which is getting reflected in the company’s strong performance delivered by shopping centers, hotels, and property sales. We expect this growth momentum to continue amid an overall recovery in the GCC region, and maintain target price.