Aldar Properties (Aldar) reported its financial and operating results for 4Q18. Contracted sales were impressive during the quarter, in our view, which was driven by sales in Alreeman pre-launch towards the end of the year; such strong sales compensated for the relatively low sales that reflected the soft market conditions in Abu Dhabi. Occupancy levels were stable across the investment portfolio with a clear pick up in average occupancies of the hospitality portfolio (80% in 2018) due to seasonality. For reported numbers, revenues came ahead of our estimates, yet blended GPM dropped 80bps sequentially pressured by relatively lower margins on the investment portfolio. Net income came below our estimate (-c8%), and was down 23.6% Q-o-Q, weighed by revaluation loss on investment properties. 

Aldar proposed DPS of AED0.14 versus our estimate of maintaining DPS at AED0.12 for the year. We believe that such news might be a positive stock trigger in the short term. The stock is offering 9.5% dividend yield (2018).
We are buyers of Aldar with our TP of AED2.2 offering 49% upside.

We believe in the company’s longer-term solid story, with Aldar offering exposure to the various real estate segments in the growing Abu Dhabi market. We are positive on the company’s increasing exposure to the mid-market segment, especially following the launch of Alghadeer in 2018. 

Mai Attia

Aldar Properties (AD): AED1.48 as of 13 Feb. 2019, Rating: Buy, TP: AED2.20/share, MCap: USD3,169mn, ALDAR UH/ALDR.AD